Morgan Stanley: The U.S. presidential election may trigger severe market fluctuations, investors are advised to focus on long-term strategies
Morgan Stanley analysts Monica Guerra and Daniel Kohen analyzed the potential impact of the 2024 U.S. presidential election on the market in a recent report, pointing out that economic signals are mixed, intensifying investor uncertainty.
They explained that fluctuations in consumer sentiment and persistent high prices are affecting voters' views, while traditional market indicators cannot provide clear predictions for election results. Despite these factors, Guerra and Kohen believe: "Although political outcomes and corresponding policy shifts may affect companies' profitability, business and economic cycles may be more relevant to market performance."
They advise investors to focus on long-term strategies rather than reacting to election-driven market changes. Analysts warn that delayed election results could lead to increased volatility, describing: "Delayed election results bring a period of uncertainty and speculation which historically leads to short-term market volatility." Due to tense polling results in key swing states and uncertain mail-in ballot counting times, final results may take several days or even weeks to reveal, potentially triggering significant market turmoil.
Looking ahead, Guerra and Kohen detailed: "As campaign activities accelerate, proposals become increasingly intense along with competition for swing state voters intensifies; we expect the final sprint on Election Day will be full of controversy.
An unexpected political event or disclosure - so-called 'October surprise', might have a slight impact on the elections. Mail-in voting and phased vote counting as well as fierce competition could leave the outcome undecided for some time causing further market volatility."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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