Originally published at: This week in charts 26/07/2024 – InvestEngine Insights
Presidential odds
With Kamala Harris now the de facto Democratic nominee, her odds of winning the presidential race have skyrocketed. Her ascent puts her chances roughly where Biden’s were before his disastrous debate performance, and has pulled Trump’s odds below 60%:
What Trump trade?
Unfortunately for those who might be investing based on the likely effects of Trump’s policies (a weaker dollar, higher long-term bond yields, lower short-term bond yields, higher equities – see this post for more), evidence of the so-called ‘Trump trade’ is slim. From looking at the events which moved the needle on his presidential odds, there’s been little evidence of any impact in the key areas we’d expect based on his proposed policies:
S&P breaks its streak
Wednesday saw the S&P 500 fall by over 2%, following a bout of increased AI skepticism after Alphabet’s and Tesla’s earnings on Tuesday. This drop meant the S&P broke its longest streak without a fall of 2% or more since 2007:
A high bar for US tech
Speaking of earnings, the market is expecting big things from the US tech sector, with earnings currently expected to grow by 18% over the next year, compared to only 8% for the S&P Equal Weight (used as a proxy for the rest of the market):
Alphabet beats expectations, but still falls
Headline earnings were strong for Alphabet, which reported on Tuesday. Profits were up 28% on the back of its booming cloud computing division, beating market expectations. The stock, however, fell 5% after earnings were announced, as their CEO mentioned investors may have some time to wait before seeing any payoff from their investments into AI. Beating estimates is already a high bar for these mega-cap tech companies to clear, but the market is punishing those which don’t also provide exclusively upbeat guidance. Longer-term, though, the company’s earnings growth has been exceptional, reflected in the stock’s return of over 23% per year since its IPO in 2004:
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