The Fed, US elections and stock markets in 2024: Hope for a soft landing and rising valuations

The Fed, US elections and stock markets in 2024: Hope for a soft landing and rising valuations

According to a report by finanzmarktwelt.de, the Fed and the US elections will be crucial factors for the stock markets in 2024. The current euphoria in the stock market is based on the assumption that the Fed will cut interest rates at least six times without the US economy falling into recession. However, it is seen as unlikely that either there will be fewer rate cuts as there will actually be a soft landing for the US economy, or that the recession will disappoint the markets' optimistic assumptions and call into question the US markets' current high valuations. While pessimism was great at the beginning of 2023, there is now gigantic Goldilocks optimism at the beginning of 2024.

According to the report, the two factors mentioned, Fed policy and the US elections, are crucial for the development of the stock market in 2024. If the Fed actually implements six interest rate cuts, this could lead to a further increase in stock prices in the short term. However, if a recession occurs or the Fed cuts interest rates less than expected, markets could come under severe pressure. The US elections will also be crucial as the president-elect's policies will have an impact on the economy.

It is therefore important to keep an eye on Fed policy developments and the political situation in the US to assess the possible impact on the stock markets in 2024.