Mark-Et Minute 7/24/2024

Investment Commentary – July 24, 2024

Year to Date Market Indices as of June 24, 2024

  • Dow 40,412 (5.34%)
  • S&P 5,546 (13.03%)
  • NASDAQ 19,637 (12.93%)
  • OIL $78.07 (9.46%)
  • Barclay Bond Aggregate (-1.26%)
  • Gold $2,422(16.96%)

JP Morgan Quick shot: President Biden bows out of the election – now what?

From a campaign and policy perspective, we don’t expect Harris’s platform to differ much from Biden’s. However, we do think it could make the election more competitive once again.

While there are still many unknowns, the possible path forward is a virtual roll call vote to confirm a new nominee before the Democratic National Convention is held from August 19 to 22. As things stand now, prediction markets and Biden’s endorsement suggest Vice President Kamala Harris is the presumptive Democratic presidential candidate.

 

What does it mean for investors?

For starters, markets don’t like uncertainty, and some of the strength in risk assets through the summer was likely due to the increased likelihood of a Republican sweep. We wouldn’t be surprised to see more turbulence as the presidential race evolves.

Otherwise, we encourage investors to focus on what stays the same. Spending on security (energy, cyber, supply chain and traditional defense) is likely to continue no matter the outcome of the election, which is why investing in the resulting infrastructure build is one of our highest conviction ideas. Likewise, the national debt and deficit will likely remain on a challenging trajectory under either party, which emphasizes the need to focus on tax efficiency in portfolios.

Market News

Momentum shift

The NASDAQ fell nearly 4%, snapping a six-week string of gains as several of the index’s mega-cap technology stocks slid for the second week in a row. The S&P 500 sustained a smaller weekly decline of around 2%, while the Dow was an outlier with a nearly 1% gain.

Market rotation

For the second week in a row, a U.S. small-cap stock benchmark outperformed by a wide margin, posting a 1.7% total return while its large-cap counterpart fell 1.8%. The Russell 2000 Index’s surge of 7.7% over two weeks was the clearest indicator of a rotation toward market segments seen as being the biggest beneficiaries of potential interest-rate cuts.

Market rotation

For the second week in a row, a U.S. small-cap stock benchmark outperformed by a wide margin, posting a 1.7% total return while its large-cap counterpart fell 1.8%. The Russell 2000 Index’s surge of 7.7% over two weeks was the clearest indicator of a rotation toward market segments seen as being the biggest beneficiaries of potential interest-rate cuts.

Bumpier ride

In a week of choppy trading, an index that tracks investors’ expectations for short-term U.S. stock market volatility rose to the highest level in nearly three months. The Cboe Volatility Index climbed 32% for the week to its highest level since April 22, when the so-called VIX was near its year-to-date high.

Europe holds steady

The European Central Bank kept its key interest rate unchanged, staying in a holding pattern for now after ordering an initial rate cut at a meeting last month. The bank’s rate cut in June widened a policy gap with the U.S. Federal Reserve, which hasn’t yet cut its key lending rate below its currently high level.

U.S. GDP ahead

Thursday’s scheduled release of the U.S. government’s initial estimate of second-quarter GDP is expected to show that the economy accelerated relative to the first quarter, when GDP grew at a 1.4% annual rate. An estimate released on Wednesday by U.S. Federal Reserve economists projected a second-quarter growth rate of 2.7%.

 

https://www.marketwatch.com/  (Market Indices)

https://www.jhinvestments.com/weekly-market-recap#market-moving-news

https://www.jpmorgan.com/insights/markets/top-market-takeaways/tmt-july-twenty-two-twenty-four-daily

https://www.jhinvestments.com/weekly-market-recap#market-moving-news

 

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.