Morgan Stanley: The US presidential election may trigger severe market volatility, and investors are advised to focus on long-term strategies

Odaily News 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 to mixed economic signals and heightened investor uncertainty. They explained that consumer sentiment fluctuations and persistently high prices are affecting voters' views, and traditional market indicators cannot provide a clear prediction of the election results. Despite these factors, Guerra and Kohen believe that "while political outcomes and corresponding policy shifts may affect company 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. The analysts warned that delayed election results could lead to increased volatility, describing: "Delayed election results bring a period of uncertainty and speculation, which historically has led to increased short-term market volatility." Due to tight polls in key swing states and uncertain times for counting mail-in ballots, the final results may take days or even weeks to be revealed, which may cause significant market turmoil. Looking ahead, Guerra and Kohen elaborated: “As campaign activity accelerates, proposals intensify, and competition for swing state voters intensifies, we expect the final sprint to Election Day to be contentious. An unexpected political event or disclosure, a so-called ‘October surprise,’ could have a minor impact on the election, and mail-in voting and phased counting, as well as the intensity of the contest, could keep the outcome undecided for some time and increase market volatility.” (Bitcoin.com)