Post-election Market Moves
With the election now behind us, what signals are the markets sending?
11.7.2024
The initial moves across equity, fixed income, and currency markets mirrored the “Trump Trade” that followed President-elect Trump’s 2016 election win. US small caps outperformed large caps. US value stocks outperformed growth stocks. US equities outperformed rest of world stocks. Treasury yields rose. The dollar strengthened.
Assets were sharply repriced as soon as election-related uncertainty was in the rear view. Market moves suggest that investors anticipate deregulation, tariffs, tax cuts, larger deficits, and increased Treasury issuance. This would lead to higher growth and inflation in the years ahead. Time will tell, but for now, investors are optimistic.
Another reason for optimism: corporate earnings. S&P 500 earnings per share are at a record high and net profit margins are healthy. For the third quarter, 70% of S&P 500 companies have reported financial results. Earnings are expected to grow 5.1% on a year-over-year basis. This will mark the fifth consecutive quarter of year-over-year earnings growth.
With the US economy expanding, corporate earnings growth persisting, Federal Reserve policymakers lowering interest rates, and potential for pro-growth government policies on the horizon, we view the backdrop as supportive for investors moving ahead.
Disclosure: Unless stated otherwise, views, opinions or forecasts expressed in this blog are those of the author and do not necessarily reflect those of the Adviser and/or its employees. The contents of this blog are distributed for informational purposes, and are not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Nothing in these communications is intended to be or should be construed as individualized investment advice. All content is of a general nature and solely for educational, informational, and illustrative purposes.