Democratic presidential candidate Joe Biden intoned at last Thursday’s debate with President Trump that America faces a “dark winter” because of rising coronavirus deaths. Could the ominous phrase also apply to the stock market?

In my latest video, I review the past week and try to get a handle on what lies ahead. For details, read my article below.

With one week to go until election day, investors stand on the cusp of a treacherous time. Earnings, politics, and the economy could all deteriorate simultaneously, driving stocks lower.

The nation is focused on the presidential race, but Wall Street last week was whipsawed by negotiations in Congress over fiscal stimulus. Stocks rose and fell according to how talks progressed. The main indices closed the week lower, as it became clear that lawmakers were gridlocked (see table).

Yes, the November 3 elections matter, but the greatest drivers of the stock market will be economic growth and corporate earnings.

As of October 23, nearly 30% of companies in the S&P 500 have reported actual results for the third quarter of 2020. The blended year-over-year earnings decline stands at -16.5%, according to data compiled by FactSet. “Blended” combines actual results for companies that have reported and estimated results for companies yet to report.

If -16.5% turns out to be the actual decline for the quarter, it will mark the second largest year-over-year decline in earnings reported by the index since Q2 (-26.9%) in the recession year of 2009. Two sectors, health care and consumer staples, are reporting year-over-year earnings growth. The other nine sectors are reporting a year-over-year decline in earnings, led by energy and industrials. The following chart breaks down Q3 earnings growth to date, sector-by-sector:

This week, 183 S&P 500 companies, including 10 Dow components, are scheduled to report results for the third quarter. Among them are the five largest stocks in the S&P 500 Index: Alphabet (NSDQ: GOOGL), Amazon (NSDQ: AMZN), Apple (NSDQ: AAPL), Facebook (NSDQ: FB), and Microsoft (NSDQ: MSFT). Combined, these tech behemoths comprise more than 20% of the weighting of the S&P 500 Index. Their earnings results will prove pivotal for the future direction of the entire stock market.

Without Big Tech’s momentum, the broader market would be underwater right now. This dynamic helps explain why the stock market has rallied, despite a recession, high unemployment and a wave of small business bankruptcies. The pandemic has facilitated the creation of a hierarchy, with tech at the top of the pyramid.

Read This Story: Picking The Winners in a Retooled Economy

Apple, in particular, is a powerful bellwether. On October 13, Apple introduced its new iPhone 12, which is 5G-enabled. The iPhone 12 is the first offering from Apple that provides ultra-fast 5G wireless connectivity. The iPhone 12’s A14 Bionic chip, designed by Apple, is the fastest chip ever in a smartphone.

Apple plans to ship at least 80 million of the new 5G phones. The release, of course, was timed to coincide with the holiday shopping season. Apple’s iPhone sales typically comprise about 60% of the company’s revenue in the holiday quarter.

Keep an eye on consumer spending numbers. The economic docket is particularly crowded this week, with the most important data scheduled for release on Thursday and Friday (see table).

Reports this week will probably point to a sputtering economy. However, the Federal Reserve has signaled that it will indefinitely maintain accommodative monetary policy, a tailwind that helps offset economic and political risks.

How to profit during a perilous interim…

We might not know who won the White House until long after the voting. A disputed election would roil the stock market. If Wall Street hates anything, it’s uncertainty. We face short-term volatility, but once the political dust settles the stock market’s long-term prospects are strong.

Remember, the world was shocked when Donald Trump won the presidency in 2016, but after the election the S&P 500 rose more than 20% in 2017.

I’m bullish on 2021, but between now and the new year we face an intervening time of peril. That’s why you should consider the trading strategies of my colleague Jim Fink, a renowned options trader who knows how to make money in up or down markets, in economic expansions or recessions.

In his capacity as chief investment strategist of Jim Fink’s Inner Circle, Jim has come up with a trade that’s positioned to reap a windfall, no matter what happens on November 3. Make this one trade before election night, and you’re 95.96% likely to win. Get the details by clicking here.

John Persinos is the editorial director of Investing Daily. Send your questions or comments to mailbag@investingdaily.com. To subscribe to John’s video channel, follow this link.