Investors in US need to brace for an uncertain market scenario this year, especially in the equities market. This year there are several outsiders in the presidential race, which has brought about anxieties. This is also compounded by factors like a low oil price market as well as a slowdown of the global economy. The S&P 500 index is around 9.4%, which can be compared to the annual gain of 6.54% that is a common occurrence in the fourth year of a presidential term. These are findings that have been put forward by the investment advisory art of the wealth and management division of Wells Fargo.
Democratic candidate Bernie Sanders and Republican candidate Donald Trump has won their primaries respectively on Tuesday and this reflects that there is not much confidence of the political status quo being maintained as well as the economic status. If such candidatures are being considered, this will only muddle up the outlook for stocks. This is a time when the market needs clarity, but with several possibilities on the presidential race, uncertainty still looms large.
The investment experts feel that, when candidates with radical ideas and diverse opinions might come into office, it is unclear the impact that it would create on the market as well as the economy. In general, the returns on large cap stocks are reigning higher than average at present. Equities on the other hand, are coming down as there are concerns about falling oil prices as well as the slowdown of the global economy which started in 2014.
Interest rate trends
The discontent that might be reflected in the voters might be due to the higher crisis concerns and lower growth rate that is troubling the nation. Even with seven years, having gone by since the last recession, the growth rate was only 2.4% last year. The interest rate was raised by the Feds two months back, which happened after a decade nearly. The rate had been held near zero since the end of 2008 in order to boost the economy. However, the market turmoil that is being witnessed now will probably lead to questions as to whether the feds should keep increasing the interest rates and what impact it would have on the economy.
Advice to investors
In such a backdrop, Wells Fargo advises investors to diversify their portfolio so that they add to adequate protection measures against volatility. Investors are recommended that stocks be held onto and bonds of the investment grade category can be added to the portfolios in order to stabilize the same. Even if the equity returns are falling, investors are advised to hold on and to look long term. For More Information on US Investment Scenario, you can Look Up Relevant Articles Here. It is also advised that investors keep a track on the economy and market news, but seek advice of experts before they take any investment decisions, especially with respect to which sectors to invest in and which sectors to move out of.