This is a new installment in an ongoing series where Marc Bautis, Wealth Manager and Founder of Bautis Financial, comments on hot topics in the financial industry.
After weeks of gains, markets slid as investors took a step back from big technology stocks. At the same time…
- A global IT outage took major corporations offline across the world.
- President Joe Biden withdrew from the election, injecting more uncertainty into the tight race.
- A shooter came close to assassinating Donald Trump at a campaign rally.
A lot has been going on, to say the least.
What could all of this mean for investors? Let’s discuss.
CrowdStrike’s Tech Outage, and Market Response
CrowdStrike, a global IT outsourcing company, took millions of Windows devices offline on Friday with a faulty 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.
However, it shows just how interconnected and fragile our technology infrastructure can be.
Markets bounced back quickly from the tech-triggered slide, which is pretty common 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 shifting their positions away from some of the sector’s biggest winners.
Let’s use this as a teachable moment: 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. But, while markets rebounded back quickly this time, that’s never a guarantee.
We’re expecting markets to remain volatile as investors position themselves ahead of major earnings reports and economic data.
The 2024 Presidential Election Candidates
On July 21, Joe Biden, the incumbent President of the United States, announced his withdrawal from the 2024 United States Presidential Election in a statement made on social media. Following the statement, he endorsed Vice President Kamala Harris as his replacement as the Democratic Party’s candidate in the election.
The announcement came a week after the July 13 assassination attempt on former President Donald Trump in Butler, Pennsylvania. The FBI continues to investigate the incident of potential domestic terrorism.
Following the failed assassination attempt, Trump Media & Technology Group’s stock price soared as Wall Street recalculated the odds of Trump succeeding in the election.
A large question remains: 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 the markets – despite what the headlines might say.
Here’s a brief look at how the S&P 500 performed when each Presidential party held the White House.
As you can see, markets grew regardless of which party held the presidency, 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.
The bottom line is that market fundamentals haven’t significantly changed, but we expect some more volatility ahead. As always, we’re watching the market and economic data closely and we’ll keep you informed along the way.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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