The tech-heavy Nasdaq Composite (^IXIC) logged its worst day this week since 2022 as investors have begun to rotate out of Big Tech equities. The addition of furthering political uncertainty around the nearing election has many on Wall Street believing an borrowing charge cut from the Federal Reserve is likely for September, paving the way for a industry shift.
Annex Wealth Management chief economist and strategist Brian Jacobsen joins Morning Brief to give insight into industry movements across big cap (^DJI, ^IXIC, ^GSPC) and small-cap equities (^RUT)
Jacobsen begins by expressing his near-term views for the industry and this earnings season: “We think that, actually, in the near term here, it is mostly about the fundamentals. But then as we get into, say, 2025, it is going to likely be a little bit more about the politics. So it will almost be punctuated by political volatility. The fundamentals we think are okay. But keep in mind it’s a matter of how much do you pay for those fundamentals.”
Jacobsen anticipates industry drivers to be “broken into two different parts” for late 2024: the Fed and the election.
“Between now and September, it’s likely more focused on the Fed. We will get distracted by politics, but really until we get closer to say end of September, beginning of October, when the polls are going to get a little bit more accurate, we think that those are just going to be like pockets of volatility,” Jacobsen explains. “The ‘Trump trade’ came back in vogue with a vengeance over the last week or so. But that could kind of simmer down a little bit.”
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