The market did not start this year optimistically, as the US stock market ended nine consecutive weeks of gains in the first few days of 2024. But an analyst said that for an election year, this is just beginning and the situation will gradually improve.
Mark Newton, a global stock strategist at US investment firm Fundstrat, said that the first quarter of an election year is often difficult before the stock market rises again.
He wrote in a report on Wednesday, "Based solely on seasonal trends, the most promising period for investors in 2024 seems to be from March to August, followed by November to the end of the year."
"The biggest pullback this year is likely to occur from February to March and from August to November," he added.
The market has lost some momentum from the heavyweight rebound that ended in 2023. Unlike last year, the market value of technology stocks evaporated by $316 billion at the beginning of this year, with Apple (AAPL) bearing the brunt, falling 4% in the first three trading days of 2024, and Tesla's stock price also showing a decline. The weakening expectation of interest rate cuts also suppressed the upward trend.
Although the market has regained some of its lost ground in the past week, Newton warns that there is increasing evidence of an unstable start to the year, especially with seasonal trends indicating mediocre performance from the beginning of the election year.
He wrote, "Since mid December, the larger trend has certainly shown some stagnation, and this greater turmoil has yet to be truly resolved."
But he added that if the stock market did indeed decline in the first few months of this year, it would be a good opportunity for investors to enter the market and take advantage of the mid-term uptrend.
Although election years often trigger a lot of uncertainty, which in turn affects the market, other Wall Street insiders also point out that election years are often beneficial for the stock market.
According to data from Bank of America, the S&P 500 index performed quite well in the election year, but these gains will not be realized until the second half of this year. Bank of America analysts say that the strongest months of the year are usually August and December.
However, in terms of its impact on financial markets, the 2024 election may be unique. A strategist at investment bank Lazard said that this year's competition could be a "watershed moment" that could have a huge impact on the global economy and stock markets.