good 😊 nsight

According to Blockworks, as July comes to a close, analysts are anticipating a volatile August, influenced by the upcoming US presidential election. Historically, August has been a turbulent month for markets. In August 2023, the S&P 500 and Nasdaq Composite indexes fell by 1.6% and 2.1%, respectively. The previous year saw the S&P 500 decline by nearly 1% and the Nasdaq Composite drop by 4.6% during the same month. The CBOE Volatility Index (VIX) has typically peaked in the first half of presidential election years over the past eight cycles. However, due to the unpredictable nature of this year's election, analysts suggest that volatility in 2024 might peak later than usual.At the time of publication, the VIX stood at 17.3, marking a more than 20% increase over the past five days and reaching its highest level since spring. In 2024, the VIX peaked in April at 19.2. With the Federal Reserve's policy-setting meeting, the Democratic delegate vote, and earnings season reports on the horizon, a rising VIX is expected. However, it has yet to reach 20, a level historically seen as a significant indicator of increasing volatility. Markets appear confident that central bankers will begin their rate-cutting cycle in the fall, and delegates have nearly confirmed Vice President Kamala Harris as President Joe Biden’s replacement, suggesting that investors may not be overly concerned about the upcoming months.Investors are also looking ahead to October, a month when presidential election speculation will peak as campaigns make their final efforts to attract voters and early voting begins. In October 2023, the S&P 500 and Nasdaq Composite indexes fell by 2.1% and 2.8%, respectively. Despite this, Jessica Rabe, co-founder of DataTrek Research, noted that stocks often peak during the final quarter of the year. Over the past four decades, the S&P 500 has typically posted its high in the fourth quarter. Stocks have already shown double-digit returns in the first six months of the year, with the S&P 500 and Nasdaq Composite indexes gaining around 15% and 18%, respectively. Historically, a strong performance in the first and second quarters leads to a slowdown in the latter half of the year. Rabe explained that the S&P’s rally tends to decelerate in the second half after rising by double digits in the first half, indicating that most of the index’s gains for the year may already be realized. However, she added that the S&P is only up 1.7% in the second half so far, compared to an average of 6.7%, suggesting that there could still be gains ahead.