Election, Rotation, and IT Outage… Oh My.
A lot has happened recently.
After weeks of gains, markets slid as investors took a step back from big technology stocks.1
At the same time, a global IT outage (largest in history) took major corporations offline across the world.
President Joe Biden withdrew from the election, injecting more uncertainty into the tight race.2
A shooter came close to assassinating Donald Trump at a campaign rally.3
Man….
What could all this mean for investors? Let’s discuss.
Crowdstrike, a global IT outsourcing company, took millions of Windows devices offline with a bad update.
Despite causing hours and days of chaos for airlines, banks, hospitals, and other companies, the economic impact of the outage is likely to be muted.4
However, it shows just how interconnected and fragile our technology infrastructure can be.
Markets bounced back quickly from the tech-triggered slide.2
It’s pretty common for markets to recover from a slide when overall sentiment or fundamentals haven’t shifted.
In this case, the quick correction was mostly concentrated in the tech sector and was related to investors rotating their positions – known as sector rotation – away from some of the sector’s biggest winners.
Let’s use this as a reminder.
One of the challenges of being a long-term investor is accepting down days and weeks.
Investors who panic and sell miss out on the strong market days that often follow.
While markets rebounded back quickly this time, that’s not guaranteed.
We’re expecting markets to remain volatile as investors position themselves ahead of major earnings reports, economic data, and upcoming elections.
This is a normal part of the market cycle.
What could a new Democratic presidential candidate mean for investors?
In the short term, extra uncertainty around the election could stoke volatility as traders revisit their bets.
However, in the medium to long term, the election isn’t likely to have much impact on markets at all – despite what the headlines might tell you.
Here’s a quick look at how the S&P 500 performed when each party held the White House.
As you can see, markets grew regardless of which party held the presidency.5
And – markets did better with a divided Congress.
That’s likely because a legislative branch split between parties makes it harder to pass new tax laws or other legislation that could affect business performance.
Bottom line: market fundamentals haven’t significantly changed but we expect more volatility ahead.
We’re watching the market and economic data closely and will keep you informed along the way.
Sources:
1. https://finance.yahoo.com/news/asian-stocks-track-us-decline-224153088.html
2. https://finance.yahoo.com/news/stock-market-news-today-tech-roars-back-as-sp-500-nasdaq-surge-ahead-of-earnings-200038261.html
3. https://www.cnn.com/2024/07/23/politics/pennsylvania-state-police-commissioner-reveals-stunning-info-about-trump-shooting/index.html
4. https://www.usatoday.com/story/money/investing/2024/07/19/us-stocks-uninterrupted-crowdstrike-outage/74469633007/
5. https://get.ycharts.com/resources/blog/an-advisors-guide-to-elections-and-the-markets/
Chart sources: https://get.ycharts.com/resources/blog/an-advisors-guide-to-elections-and-the-markets/
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Election, Rotation, and IT Outage
Election, Rotation, and IT Outage… Oh My.
A lot has happened recently.
After weeks of gains, markets slid as investors took a step back from big technology stocks.1
At the same time, a global IT outage (largest in history) took major corporations offline across the world.
President Joe Biden withdrew from the election, injecting more uncertainty into the tight race.2
A shooter came close to assassinating Donald Trump at a campaign rally.3
Man….
What could all this mean for investors? Let’s discuss.
Crowdstrike, a global IT outsourcing company, took millions of Windows devices offline with a bad update.
Despite causing hours and days of chaos for airlines, banks, hospitals, and other companies, the economic impact of the outage is likely to be muted.4
However, it shows just how interconnected and fragile our technology infrastructure can be.
Markets bounced back quickly from the tech-triggered slide.2
It’s pretty common for markets to recover from a slide when overall sentiment or fundamentals haven’t shifted.
In this case, the quick correction was mostly concentrated in the tech sector and was related to investors rotating their positions – known as sector rotation – away from some of the sector’s biggest winners.
Let’s use this as a reminder.
One of the challenges of being a long-term investor is accepting down days and weeks.
Investors who panic and sell miss out on the strong market days that often follow.
While markets rebounded back quickly this time, that’s not guaranteed.
We’re expecting markets to remain volatile as investors position themselves ahead of major earnings reports, economic data, and upcoming elections.
This is a normal part of the market cycle.
What could a new Democratic presidential candidate mean for investors?
In the short term, extra uncertainty around the election could stoke volatility as traders revisit their bets.
However, in the medium to long term, the election isn’t likely to have much impact on markets at all – despite what the headlines might tell you.
Here’s a quick look at how the S&P 500 performed when each party held the White House.
As you can see, markets grew regardless of which party held the presidency.5
And – markets did better with a divided Congress.
That’s likely because a legislative branch split between parties makes it harder to pass new tax laws or other legislation that could affect business performance.
Bottom line: market fundamentals haven’t significantly changed but we expect more volatility ahead.
We’re watching the market and economic data closely and will keep you informed along the way.
Sources:
1. https://finance.yahoo.com/news/asian-stocks-track-us-decline-224153088.html
2. https://finance.yahoo.com/news/stock-market-news-today-tech-roars-back-as-sp-500-nasdaq-surge-ahead-of-earnings-200038261.html
3. https://www.cnn.com/2024/07/23/politics/pennsylvania-state-police-commissioner-reveals-stunning-info-about-trump-shooting/index.html
4. https://www.usatoday.com/story/money/investing/2024/07/19/us-stocks-uninterrupted-crowdstrike-outage/74469633007/
5. https://get.ycharts.com/resources/blog/an-advisors-guide-to-elections-and-the-markets/
Chart sources: https://get.ycharts.com/resources/blog/an-advisors-guide-to-elections-and-the-markets/
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
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