The outcome of the 2024 United States elections has spurred numerous reactions. Some Americans feel hopeful, while others harbor reservations about the political shift. What is clear, however, is that the election results have had a significant impact on the financial markets. Stock markets surged immediately following the election, driven by investor optimism and a phenomenon referred to as a "relief rally." A relief rally is a market rebound that typically follows the removal of uncertainty, such as an election outcome (not necessarily due to a particular candidate's victory).
The recent uptick in market performance indicates renewed confidence in economic stability, with investors seeing a potential easing of regulatory constraints and policy unpredictability, especially in critical sectors like finance, energy, and technology. However, this response, albeit significant, is temporary, prompting a careful examination of market dynamics. Given this context, Fortis Portfolio Solutions, LLC, a boutique Outsourced Chief Investment Officer (OCIO), emerges as a trusted partner, committed to helping individuals and entities navigate complex markets.
Besides the rally, other dynamics are shaping the post-election economic landscape. Individuals, businesses, and corporations usually pause significant business decisions during election cycles and await policy directions under new leadership. Now that there is clarity on the horizon, sectors such as banking, consumer finance, and cryptocurrencies are performing well, as investors anticipate greater flexibility in regulatory policies.
Expectations are high for reduced capital restrictions. This makes mergers more attractive to companies and investors. Private prison stocks are most enticing, as they have experienced gains due to anticipated immigration policy changes that could result in more stringent enforcement.
It is worth highlighting that stocks across industries and sectors showcase variations in performance. For instance, the energy sector faces a mixed outlook. Traditional oil and gas stocks will likely perform well under policies favoring domestic production. On the other hand, electric vehicle companies may see headwinds if subsidies are cut. Industry giants like Tesla are an exception, as they benefit from their unique position in the electric vehicle (EV) market, recent global expansion, and direct relations with the president-elect.
Consumer-focused industries, such as retail and housing, are also adapting to changing economic conditions. The rising interest rates challenge homebuilders and dollar stores, as higher borrowing costs make housing and consumer goods less affordable. Companies relying on imports are managing uncertainties around potential trade policies, which could affect pricing and profitability.
Meanwhile, in the renewable energy sector, solar stocks have declined due to anxieties over possible shifts in healthcare and energy policies that could deprioritize alternative energy support. Essentially, these industry-specific responses emphasize that, indeed, the election has lifted some sectors. However, others are encountering obstacles driven by various concerns.
Looking at the macroeconomic front, the US Treasury's latest sale of 30-year bonds garnered mixed sentiment. Domestic investors showed keen interest, but international bids were lukewarm, indicating potential apprehension about the country's economic direction. The markets were invigorated, however, after the Federal Reserve announced a 0.25 percent interest rate cut.
This cut stimulated the economy, impacting sectors like technology, which generally thrive in low-interest-rate environments. Cheaper borrowing options encourage companies and consumers to pursue investments in major purchases and expansion projects, driving demand and economic growth.
Overall, the outlook is still cautiously optimistic, even with global concerns about trade tensions and fluctuating regulatory landscapes. Investors can capitalize on promising conditions, balancing growth opportunities with risk management. With over 13 years of experience providing white-label services for financial advisors and institutions, Fortis reminds investors that economic changes require time to fully manifest. For example, rate cuts stimulate economic activity, but the benefits are gradual, usually taking 18 months to cascade through the broader economy.
"Investors are still optimistic," says Founder Meridith Hutchens. "But we advise everyone to remain vigilant for underlying risks that may not yet be apparent while markets hover near high valuations."
Fortis highlights geopolitical tensions and trade policy shifts as potential disruptors, particularly for sectors tied to global supply chains. It also cautions that sustained low interest rates can fuel asset bubbles. The chances of this happening are higher when leveraged extensively without parallel economic growth.
"The markets will naturally adjust to new regulatory frameworks and fiscal environments," supplies Hutchens. "The goal is to balance managing risks and pursuing opportunities for growth. It's up to individuals and corporations to stay informed and ready to adapt in a landscape that's always changing."
Fortis' role is to provide clients with a robust framework for navigating this environment. It employs a dynamic investing philosophy to emphasize proactive over reactive decision-making. The Illinois-based firm takes pride in its forward-looking approach that continuously adjusts to current market information and trends.
Its strategy includes constant portfolio reassessment and rebalancing, helping clients optimize returns while managing risk. Fortis fine-tunes portfolios to balance stability with growth potential by differentiating between volatility (temporary price swings) and risk (potential permanent loss). Doing so allows it to tailor strategies to clients' risk tolerance and their capacity for achieving investment goals.
Fortis Portfolio Solutions remains dedicated to helping clients capitalize on opportunities and manage emerging risks, especially as the post-election economy unfolds. Its dynamic investing approach based on comprehensive market analysis presents a path toward sustainable growth.
