Amid Focus on Elections, Don't Neglect Market Moves
Wednesday, Nov 6, 2024 2:49 am ET
As the U.S. presidential election approaches, investors are understandably focused on the potential outcomes and their implications for the market. However, it's crucial not to overlook the significant market moves and trends that have been shaping the financial landscape throughout the year. This article will delve into the key market developments, earnings reports, and economic indicators that have driven stock performance, highlighting the importance of maintaining a long-term perspective and focusing on fundamentals.
Throughout 2024, the market has shown remarkable resilience, with the S&P 500 gaining approximately 20% in the first 10 months of the presidential election year. This strong performance is comparable to the best first 10 months of a presidential election year since 1936, according to Bespoke Investment Group. Despite geopolitical tensions and economic uncertainties, the market has continued to rise, underscoring the importance of focusing on fundamentals rather than short-term political noise.
One of the primary drivers of market performance has been the earnings reports from major companies, particularly in sectors like Big Tech and insurance. For instance, Netflix's Q3 earnings beat estimates, adding 5.1 million subscribers and boosting its stock. Similarly, Taiwan Semiconductor Manufacturing Co's Q3 net revenue jumped 36% year-on-year, driving its stock higher. On the other hand, Starbucks' same-store sales decline led to a drop in its stock. These earnings reports underscore the importance of fundamental analysis in driving stock performance, regardless of political events.
Geopolitical tensions and economic uncertainties have also impacted market performance. For instance, oil prices have soared due to Middle East tensions, as seen in the CNBC Daily Open on Aug 12, 2024. Additionally, China's economic weaknesses, such as slowing growth and trade disputes, have caused market fluctuations. Despite these uncertainties, the market has shown resilience, with the S&P 500 gaining 20% in 2024.
Interest rates and Federal Reserve policy have significantly impacted market trends in the past year. In 2024, the Fed signaled a potential rate cut, leading to a soar in U.S. stocks and oil gains (Aug 1, 2024). Later, the Fed's rate cut in March 2024 led to an average 7.5% return in the S&P 500 during presidential election years, compared to 8% in non-election years (J.P. Morgan Private Bank, Mar 2024). The ECB's rate cut in October 2024 also boosted U.S. markets, with the Dow hitting another record high (Oct 18, 2024). Despite political uncertainty, investors should focus on these monetary policy moves, as they have historically driven market trends.
In conclusion, while the upcoming election may capture investors' attention, it's essential not to overlook the significant market moves and trends that have been shaping the financial landscape throughout the year. Focusing on fundamentals, such as earnings reports and economic indicators, and maintaining a long-term perspective are crucial for navigating the market's ups and downs. As the election approaches, investors should remain vigilant and adapt to changing market conditions while keeping their eyes on the bigger picture.
Throughout 2024, the market has shown remarkable resilience, with the S&P 500 gaining approximately 20% in the first 10 months of the presidential election year. This strong performance is comparable to the best first 10 months of a presidential election year since 1936, according to Bespoke Investment Group. Despite geopolitical tensions and economic uncertainties, the market has continued to rise, underscoring the importance of focusing on fundamentals rather than short-term political noise.
One of the primary drivers of market performance has been the earnings reports from major companies, particularly in sectors like Big Tech and insurance. For instance, Netflix's Q3 earnings beat estimates, adding 5.1 million subscribers and boosting its stock. Similarly, Taiwan Semiconductor Manufacturing Co's Q3 net revenue jumped 36% year-on-year, driving its stock higher. On the other hand, Starbucks' same-store sales decline led to a drop in its stock. These earnings reports underscore the importance of fundamental analysis in driving stock performance, regardless of political events.
Geopolitical tensions and economic uncertainties have also impacted market performance. For instance, oil prices have soared due to Middle East tensions, as seen in the CNBC Daily Open on Aug 12, 2024. Additionally, China's economic weaknesses, such as slowing growth and trade disputes, have caused market fluctuations. Despite these uncertainties, the market has shown resilience, with the S&P 500 gaining 20% in 2024.
Interest rates and Federal Reserve policy have significantly impacted market trends in the past year. In 2024, the Fed signaled a potential rate cut, leading to a soar in U.S. stocks and oil gains (Aug 1, 2024). Later, the Fed's rate cut in March 2024 led to an average 7.5% return in the S&P 500 during presidential election years, compared to 8% in non-election years (J.P. Morgan Private Bank, Mar 2024). The ECB's rate cut in October 2024 also boosted U.S. markets, with the Dow hitting another record high (Oct 18, 2024). Despite political uncertainty, investors should focus on these monetary policy moves, as they have historically driven market trends.
In conclusion, while the upcoming election may capture investors' attention, it's essential not to overlook the significant market moves and trends that have been shaping the financial landscape throughout the year. Focusing on fundamentals, such as earnings reports and economic indicators, and maintaining a long-term perspective are crucial for navigating the market's ups and downs. As the election approaches, investors should remain vigilant and adapt to changing market conditions while keeping their eyes on the bigger picture.