- Markets brace for potential volatility with the upcoming 2024 Presidential Election, affecting equities and bonds.
- Market anticipation of a 25 basis-point cut to the federal funds rate with the scheduled Federal Reserve Rate Decision.
- 3Q earnings season continues with reports expected from Vertex Pharmaceuticals, Palantir Technologies, Marriot International, and more.
It’s a nerve-wracking week as stakes are high with major events like the 2024 Presidential Election, the Federal Reserve’s rate decision, and ongoing 3Q earnings reports, along with new economic indicators on the US economy.
1. Election Impact on Markets
With the 2024 presidential election happening on Tuesday, markets are positioning for potential outcomes. A victory for Donald Trump, the former president and current Republican nominee, or a Republican sweep could lead to higher interest rates and strong performance of cyclical stocks. Conversely, a victory for Kamala Harris, the current Vice President and Democratic nominee, or an unclear result could create uncertainty, impacting equities and bonds differently.
2. Federal Reserve’s Monetary Policy Outlook
Markets will keep a keen eye on the Federal Reserve’s interest rate decision on Thursday. A 25 basis-point cut to the federal funds rate is likely, following September’s larger 50 basis-point reduction. Traders will also be watching for additional insights on the Fed’s plans for the rest of the year.
Although the Fed is expected to lower rates by 25 basis points next week, they will ultimately need to decide if inflation at around 2.7% and wages growing at 4% with full employment is sufficient, or if further measures are needed to bring inflation down to 2%, which could risk job losses.
3. 3Q Earnings Season
The 3Q earnings season continues, with reports expected from large- and mid-cap companies like Vertex Pharmaceuticals Inc (NASDAQ:VRTX), Palantir Technologies Inc (NYSE:PLTR), Marriott International Inc (NASDAQ:MAR), American International Group Inc (NYSE:AIG), Apollo Global Management (NYSE:APO), Qualcomm Inc (NASDAQ:QCOM), and Airbnb Inc (NASDAQ:ABNB).
4. Upcoming Economic Data
On the economic data front, the October ISM Services PMI is anticipated to show continued growth in the services sector at a slower pace. In September 2024, the ISM Services PMI surged to 54.9 from 51.5 in August, significantly exceeding the forecast of 51.7. This marked the strongest growth in the services sector since February 2023. The consensus forecast for October is 53.3.
Other key data releases will include the November preliminary Michigan consumer sentiment index, September trade data, September factory orders, and the final October S&P Global Services and Composite PMIs.
This week is set to be a whirlwind for the markets, with political, economic, and corporate events all vying for attention. Investors should stay alert and be prepared for potential market swings as these key events unfold.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
