Strategy Insights Fourth Quarter

Financial markets, already clouded by uncertainty surrounding high inflation and the path of monetary policy, are gearing up to contend with another potential force — November 2024 U.S. elections. The momentum of political rhetoric and discord is likely to only accelerate from here, and with it, perhaps market volatility as well.

As we expect the election to dominate the near-term news cycle, we thought it would be helpful to revisit the historical effects of presidential election cycles on markets and consider how investor portfolios could be affected — for better or worse.

Undeniably, the biggest challenge since the beginning of 2024 has not been the election cycle, but the choppy path of inflation. The Consumer Price Index has been above the Federal Reserve (Fed’s) 2% target for more than three years, which has contributed to a challenging macro backdrop, characterized by the highest interest rates in 15 years, restrictive monetary policy and slowing global economic growth. While the stock market might appear to be producing another year of exceptional returns, market leadership thus far has been dominated by mega-cap companies focused on artificial intelligence innovation. We believe inflation will play a key role in the upcoming election, which could have important ramifications for the economy and markets over the long term.

In this edition of Strategy Insights, we take a look at the impact of election outcomes on markets, historical election predictors, and share our views on the potential market and investment implications of the 2024 election. While there is no shortage of data to review, we hope this serves as a useful guide in the eventful months to come.