Monday, November 4, 2024

Markets brace for presidential election, Fed meeting: What to know this week

Must read

Election Day is almost here. The looming question remains how a Donald Trump or Kamala Harris victory will shape the market narrative for the rest of the year and beyond.

Investors should soon learn the answer, with Americans heading to the polls next Tuesday. In the week before the election, the S&P 500 (^GSPC) fell about 1.37% while the tech-heavy Nasdaq Composite (^IXIC) shed 1.5% despite hitting its first record close since June during the week. Meanwhile, the Dow Jones Industrial Average (^DJI) dropped just over 0.1%.

It’s not the only big event of the week ahead. On Thursday the Federal Reserve will announce its latest policy decision, with markets largely anticipating that the central bank will cut interest rates by a quarter percentage point.

Earnings season rolls on with a week headlined by reports from Palantir (PLTR), Super Micro Computer (SMCI), Arm (ARM), Qualcomm (QCOM), and Moderna (MRNA).

One of the top potentially market-moving events that strategists have discussed throughout the year has finally arrived with the 2024 presidential election slated for Tuesday, Nov. 5.

But it’s been an abnormal election year for markets. When analyzing the S&P 500’s average intraday trading range, Carson Group chief markets strategist Ryan Detrick found that this past October was the second-least volatile month leading into an election in the past 50 years.

Zooming out further, research from Bespoke Investment Group shows the S&P 500 had its best start to an election year since 1932, with a 20% year-to-date return for the benchmark index through the end of October.

Still, Election Day itself is considered a risk event for markets. Speculation has built that a “Trump Trade” has been forming in markets as the betting odds of the former president winning the election have risen. But some market strategists aren’t convinced there’s a clear read on what outcome investors will be rooting for come Tuesday.

“I think the market would do fine with Harris,” Yardeni Research chief markets strategist Eric Wallerstein told Yahoo Finance. “I think the market would do fine with Trump. I don’t think the stock market is really pricing any presidential odds.”

Franklin Templeton chief markets strategist Stephen Dover told Yahoo Finance that the key for markets could simply be getting past the event itself.

“Just having those elections settled, whichever way it goes, would be positive,” Dover said.

Baird market strategist Michael Antonelli agreed, telling Yahoo Finance that the riskiest scenario from the election is “one where we just don’t know the winner.”

Latest article