With the Federal Reserve announcing its first rate cut since 2020 last week, much of the uncertainty in the US stock market has been eliminated - at least in the short term. Market attention is now turning more towards the next major event: the US general election.

There are only 6 weeks left until the U.S. election on November 5th. On Monday in the U.S. Eastern Time, Bank of America published a report, plotting the S&P 500 index's implied daily trend from now until one day after the election based on option prices, thereby estimating several important trading days for U.S. stocks in the next six weeks.

November 6: Day after the U.S. election

On November 6th, the day after the U.S. election on November 5th, is usually when most of the preliminary election results are released, making it the most important day for the U.S. stock market. The election results at that time will have a huge impact on the U.S. stock market.

Bank of America expects the S&P 500 index to have a fluctuation range of 2.5% on November 6th.

For investors, this will be a significant day because assuming the election results are announced, the market will react based on the policies the election winner may adopt during the next four-year term.

On the second day after the last presidential election, the stock market also experienced a similar scale of volatility: the S&P 500 index rose by 2.2% on November 4, 2020.

October 4th and November 1st: Non-Farm Payrolls Released

Investors will closely watch the September and October non-farm employment reports, which will be released on October 4th and November 1st respectively. The options market expects the S&P 500 index to fluctuate by more than 1% on these two days.

Bank of America expects that if the non-farm employment report shows strong performance, it may push stock prices in the USA to rise.

"We believe that good news is good news for the stock market, these two data surprises should be a bullish factor for the stock market," Bank of America said.

Week of October 21st: Important Earnings Week

The week of October 21st is the most important week in the third-quarter earnings season for the USA stock market - several companies among the 'Big Seven' are expected to announce earnings during this week. This date represents the estimated day some of the mega-cap tech companies will announce third-quarter earnings results.

Options prices indicate that the implied volatility of the S&P 500 index during the week is 1%.

"The important Third Quarter Performance Week (October 21st to 25th) should also be a major catalyst for the market," Bank of America said, as investors will seek progress in the conversion of artificial intelligence technology into profit prospects from the earnings reports of these large tech companies.

October 10th: CPI data for September.

It can be seen from the September statement of the Federal Reserve that the FOMC has gradually shifted its focus from inflation to the labor market. This means that although the CPI data for September is still important, its impact on the stock market may be smaller than the non-farm payroll data mentioned earlier.

Options pricing implies that when the CPI data for September is released on October 10th, the daily volatility of the s&p 500 index will be slightly lower than 1%.

"Before the first rate cut, inflation data was the most important data to watch. But now that the Federal Reserve has started a rate-cutting cycle, we believe that labor market data (such as non-farm payroll data) will be more important than inflation," Bank of America said.

Editor/ping