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CLICK HERE – Market Commentary September 2024 – Summit Financial Consulting LLC
Could Presidential Election Outcomes Lead to Market Volatility?
Since our last update, the preliminary polling is suggesting that we are going to have a very close Presidential election in November, with a few important swing states most likely determining the outcome. Generally speaking, the stock market does not like uncertainty. This increases the probability of some volatility in the stock market leading up to election day.
Inflation Trends Show Positive Movement Toward Federal Reserve’s Goals
We received the consumer price index numbers for July this month, which were lower than expected. It increased 0.2% for the month, which equates to a 12-month inflation rate of 2.9%. The Federal Reserve has long said that their inflation target is 2%, and the fact that inflation is trending towards 2% is a welcome sign. The Federal Reserve is meeting on September 17-18th, and it is our belief that the most likely scenario is that the Fed will cut interest rates by 0.25%. The last time the Fed cut interest rates was March 16th of 2020, in the heat of the Covid pandemic.
Expected Rate Reductions May Positively Influence Economic Growth
Lowering interest rates has the potential to help the economy. One example is mortgage interest rates. In anticipation of a Federal Reserve interest rate cut, the interest rate markets, especially 10-year US government bonds, have been falling. Last week, the rate of a 30-year mortgage was 6.59%, which is the lowest since May of 2023 and a big drop from the peak in October of 2023 when rates hit 8.01%. Mortgage rates are one example, but a lot of other types of loans, including credit cards, construction and business loans, also potentially benefit from a lower interest rate environment.
Overall, for this month, there are some catalysts present that could help, and some that have the potential to hurt the market, so the most likely outcome in our opinion for the next two months is volatility.
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Watch This Month’s Market Commentary on YouTube:
Sincerely,
with contributions from Robert Wink, James Wink, Zachary Bachner, James Baldwin, and Daniel Ladzinski
Sources:
- https://www.npr.org/2024/08/26/nx-s1-5088061/harris-trump-swing-states-electoral-map
- https://www.cnbc.com/2024/08/14/july-consumer-price-index.html
- https://www.federalreserve.gov/faqs/economy_14400.htm
- https://www.forbes.com/advisor/investing/fed-funds-rate-history/
- https://www.bankrate.com/mortgages/analysis/
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