AXA IM: Why election uncertainty won’t and shouldn’t put investors off the US

Apr 25, 2024

• The US market, and economy, continue to outperform investor expectations
• The US is home to some of the world’s leading and most innovative companies across a spate of different business sectors
• No matter the outcome of November’s presidential election, we believe the US offers a myriad of compelling long-term investment opportunities

Everything about the United States is big – its market, its economy and the companies housed there. It is also continuing to confound investors’ expectations. Many anticipated it would slip into recession in 2023, but this never came to pass. Instead, according to the US Treasury, it delivered above average economic growth over the 12 months because of “growing economic output, labour market resilience, and slowing inflation.

The more-robust-than-expected backdrop translated into strong stock market returns in 2023, with the S&P 500 up 26%, the Dow Jones ahead by 17% and technology-heavy Nasdaq up a significant 45%, driven by the well-documented ascent of generative artificial intelligence. The momentum has spilled into 2024 too, with each of those indices having soared to fresh highs.

'Certainly, it would be unwise to believe the robust performance of late will continue uninterrupted. Few would be surprised if the US stock market went through a period of adjustment, especially as much of the recent rally has chiefly been driven by the technology sector. But over the long term, given the diversity of sectors and the depth of innovation on offer, we believe the US is a market not to be ignored. Not even the imminent election should dim its long-term appeal. Even Fed boss Jerome Powell has asserted that while the central bank’s November policy meeting occurs the day after the election, it will not influence any decision on interest rates,' Chris Iggo, chair of the AXA IM Investment Institute and CIO of AXA IM Core writes in his latest Viewpoint CIO. 

'This is not to downplay the potential for different policy outcomes depending on who wins in November. We will return to this theme later in the year. However, companies are resilient and in good shape and the US economy enters the election period in a very strong position. That should support returns to investors through any period of political uncertainty,' Iggo adds.