⚡ How Will the 2024 Elections Impact Your Investment Strategy?
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Dear readers, our focus will be on the impact of US elections, market performance, and strategic moves to position your portfolio for success.
Let's get started!
The Impact of US Elections on the Market
As we approach the upcoming US elections, it's important to understand how different outcomes might affect various sectors.
Historically, elections have brought about significant market volatility and opportunities
For example, in the 2016 election, the S&P 500 Index rose just 3% in November, but the financial sector surged by 17%, while utilities lagged behind with only a 1% gain. Similarly, after the 2020 election, the S&P 500 saw an 8% increase by the end of November, with energy stocks jumping by 27%.
This year, the analysis suggests that:
A Republican sweep could lead to fiscal expansion and deregulation, benefiting sectors like financials and energy, potentially increasing corporate profits by 15%.
A split Congress could result in limited new regulatory initiatives but might maintain the current fiscal trajectory, potentially stabilizing GDP growth at around 2.5%.
A Democratic win could focus on sustaining current policies, impacting sectors such as healthcare and renewable energy, possibly maintaining inflation at around 3.6%.
Takeaway: Regardless of the outcome, election results historically impact market volatility and sector performance. Staying informed can help you navigate these changes.
Market Trends: What to Watch
The stock market has shown robust performance so far in 2024, with the S&P 500 index up by 11.2% year-to-date. Key drivers include strong earnings in the technology and healthcare sectors, which have grown by 8% and 7%, respectively. This is a significant recovery from the volatile 2022, where the index dropped by 18%.
Additionally, the Dow Jones Industrial Average has reached new heights, briefly crossing the 40,000 mark for the first time ever. The Nasdaq Composite has also shown impressive growth, with an 11.2% increase year-to-date.
Key Numbers to Note:
S&P 500: +11.2% YTD
Technology Sector: +8% YTD
Healthcare Sector: +7% YTD
Dow Jones: Crossed 40,000 mark
Nasdaq: +11.2% YTD
Interest rates have also stabilized, with the 10-year Treasury yield, which peaked at 5% last October, now around 4.42%. This change signals potential rate cuts later in 2024, easing concerns over restrictive monetary policy. In comparison, the yield was 3.5% at the same time last year, showing a significant change in market expectations.
Takeaway: The market has shown resilience and growth, but keeping an eye on interest rates and sector performance is crucial for informed investment decisions.
Strategic Investment Approaches for 2024
In this dynamic market environment, it's crucial to adopt strategic investment approaches. Here are some insights:
Oil and Gold Prices: Oil prices have stabilized around $79.53 per barrel, down 35% from their peak of $120 in 2022. Meanwhile, gold prices have surged to over $2,400 per ounce, up 20% from the previous year. This highlights the demand for safe-haven assets amidst market uncertainties.
Geopolitical Risks: Tariffs on Chinese goods are expected to increase by 10%, impacting sectors like Industrials and Technology. Investors should stay vigilant and adapt to these changes to protect their portfolios.
Corporate Profits: Corporate profits are projected to rise by 12% in 2024, supported by economic growth and favorable interest rates. This is an improvement over the 10% increase seen in 2023, reflecting a positive business outlook.
Whether you are focusing on inflation trends, market performance, or sector-specific strategies, the insights provided here will help you build a resilient portfolio.
Best regards,
Alessandro
Macro Mornings
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Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.