Trump, JD Vance and Stock Market Momentum: Here’s Why

Former President Trump has officially won the GOP nomination alongside his vice presidential pick, Sen. J.D. Vance.

The Ohio Republican senator, a former Marine, private equity graduate and author of a best-selling novel turned Netflix special, received the endorsement Monday, two days after the former president narrowly escaped an assassination attempt at a rally in Pennsylvania.

“Before this horrible event, markets were already expecting, after the debate, a Trump victory. Now, what are investors expecting? A wave of red,” Jason Katz, UBS managing director and senior portfolio manager, said on “Varney & Co.,” predicting what could happen if the Republican ticket wins the White House. “The 2017 tax bills become permanent, maybe you get some additional tax cuts. You’ll have a lot less misguided regulation; we could see a very strong rebound in M&A activity,” he said.

ELON MUSK HAILS TRUMP’S VICE PRESIDENTIAL PICK JD VANCE

FED’S POWELL CONDEMNS TRUMP ASSASSINATION ATTEMPT: ‘A SAD DAY FOR OUR COUNTRY’

The Dow Jones Industrial Average closed above 40,000 on Monday, a new record, up 6.7% this year, while the S&P 500 is within touching distance of its all-time high, up 18% this year. The tech-heavy Nasdaq Composite gained 23%, closing just below its record set earlier this month.

With the Republican National Convention underway, investors will be listening for details on whether the GOP’s policy agenda will be able to sustain stock momentum.

LIVE NEWS FROM THE RNC

During a recent Ameriprise virtual roundtable, “How Will the Election Impact Markets?” in late June, which featured FOX Business, Anthony Saglimbene, chief market strategist at Ameriprise Financial, said investors could be in for more volatility through November.

““Markets are starting to lose focus on who’s in the White House, but also who controls Congress, which could create a period of volatility. But what we’ve seen historically is that regardless of the outcome of the election, volatility falls back to more normal levels after Election Day,” he noted, and investors then turn to fundamentals. “The level of interest rates, corporate growth and earnings, and obviously the path of monetary policy, those are the four things that typically drive markets,” he said.

The team was not available to comment on whether the attempted assassination of Trump this weekend would impact the market or the election.

THE FED DOESN’T NEED TO WAIT TO CUT RATES

Outside of the upcoming election, there are tailwinds for the economy. On Monday, Federal Reserve Chairman Jerome Powell said policymakers are seeing positive inflation data and don’t necessarily need to sit back and wait for inflation to reach their preferred target rate.

“That implies that if you wait for inflation to come back down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightening that you’re doing, is still having an effect, which will probably push inflation down below 2%,” Powell told attendees at the Economic Club of Washington, D.C.

The consumer price index fell by 0.1% in June compared to May, the first monthly decline since May 2020. However, year-on-year prices remain elevated at 3%.

Currently, 89% of market participants are pricing in a rate cut in September, according to the CME’s FedWatch tool, which tracks rate movements. No action is expected at the July meeting.

Russell Price, chief economist at Ameriprise, expects a rate cut in September and another in December, but says the health of the American consumer is the main driver of the economy.

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““What’s really most important is consumers. Consumer spending has declined a little bit. Consumers are still doing well, in my view. But they’ve aged a little bit in terms of the amount of money they spent on goods a few years ago and more recently on services, including travel, vacations and so on. But consumers are generally in good financial shape,” he noted.