The rotation into cyclical and small cap stocks that we saw on the back of Biden’s debate performance and the Trump assassination attempt could pause on this latest news as the probability of a Republican sweep has most likely declined.
In a somewhat stunning turn of events, President Joe Biden announced Sunday that he is withdrawing from the 2024 Presidential race. Pressure from within the party and from donors over the past several weeks was likely the impetus for the decision, as it had become increasingly apparent that Biden’s age and acuity were liabilities for the campaign. Following his announcement to step down, President Biden endorsed Vice President Kamala Harris to take his spot at the top of the ticket.
Given the lack of recent precedent for this event, the next steps remain somewhat unclear. Reportedly, former President Barack Obama would prefer a contested convention to further the appearance of a representative foundation for Harris’ candidacy. However, with only about a month until the Democratic National Convention (August 19 – 22) and four months until Election Day, any delay in recognizing Harris as the candidate would likely hinder both fundraising and a re-invigoration of the delivery of the platform to align with Harris’ strengths.
In terms of the details of the platform, our view is that it will be largely consistent with that of President Biden, which we outlined in our recent Market Reaction to Trump Assassination Attempt note. In short, we believe a Harris presidency could bring higher corporate and personal taxes, restrictions on foreign trade, which could include higher/broader tariffs, and enhanced border security. It may also bring a renewed focus on issues such as climate change and abortion rights given Harris’ record.
In terms of the market reaction, U.S. equities were higher, with semiconductor stocks rebounding and the Nasdaq leading the way. Admittedly, the rotation into cyclical and small cap stocks on the back of a poor debate performance by Biden and the Trump assassination attempt could pause based on the Biden news, as the probability of a Republican sweep has most likely declined. While it is yet unclear how Harris would fare in the general election versus former President Trump, it is expected that her numbers will reflect at least a modest increase versus Biden; polling could improve even further depending on her selection of a running mate, particularly if she chooses a sitting swing-state governor. With that said, we believe this week’s U.S. market activity is likely to be more strongly correlated with earnings, as Microsoft, Alphabet, Apple, Meta and Amazon will all report over the next five days.
VIDEO
Holly Newman Kroft Discussed the Character of the Current Market
INSIGHTS
CIO Notebook: With Inflation in Line, Focus Shifts to Jackson Hole
Accolades
Forbes/SHOOK 2024 List of Top Next-Gen Wealth Advisors Best-in-State
MARKET COMMENTARY
Change Becomes July’s Constant
INSIGHTS
CIO Notebook: August Brings Volatility – But Will It Last?
INSIGHTS
CIO Notebook: July Payrolls Underwhelm as Fed Holds Firm
INSIGHTS
CIO Notebook: Powell Pushes Toward a September Cut
INSIGHTS
Neuberger’s Stephanie Luedke: How Being Myself Made Me a Better Leader
VIDEO
Kantor Group Q2 2024 Roundtable – Topics Driving the Financial Markets
INSIGHTS
Financial Literacy for the Next Generation
INSIGHTS
U.S. Election: The Policy Choice
INSIGHTS
Estate Planning for Art and Collectibles
INSIGHTS
A New Era for Small Caps?
IMPORTANT INFORMATION:
This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. This material is general in nature and is not directed to any category of investors and should not be regarded as individualized, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. Any views or opinions expressed may not reflect those of the firm as a whole. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. Diversification does not guarantee profit or protect against loss in declining markets. Investing entails risks, including possible loss of principal. Investments in private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in private equity are intended for sophisticated investors only. Unless otherwise indicated, returns shown reflect reinvestment of dividends and distributions. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.
Portfolio positioning views expressed herein are those of Neuberger Berman’s Private Wealth Investment Group, which may include those of the Neuberger Berman’s Asset Allocation Committee. Asset allocation and positioning views are based on a hypothetical reference portfolio. The Private Wealth Investment Group analyzes market and economic indicators to develop asset allocation strategies. The Private Wealth Investment Group works in partnership with the Office of the CIO. The Private Wealth Investment Group also consults regularly with portfolio managers and investment officers across the firm. The Asset Allocation Committee is comprised of professionals across multiple disciplines, including equity and fixed income strategists and portfolio managers. The Asset Allocation Committee reviews and sets long-term asset allocation models, establishes preferred near-term tactical asset class allocations and, upon request, reviews asset allocations for large, diversified mandates. Asset Allocation Committee members are polled on asset classes and the positional views are representative of an Asset Allocation Committee consensus. The views of the Asset Allocation Committee and the Private Wealth Investment Group may not reflect the views of the firm as a whole and Neuberger Berman advisers and portfolio managers may take contrary positions to the views of the Asset Allocation Committee or the Private Wealth Investment Group. The Asset Allocation Committee and the Private Wealth Investment Group views do not constitute a prediction or projection of future events or future market behavior. Defensive positioning generally means an underweight bias on allocations to risk assets such as equities and alternatives. Positioning views may change over time without notice and actual client positioning may vary significantly. Discussion of yield characteristics or total returns of different asset classes are for illustrative purposes only. Such asset classes, such as equities and fixed income, may have significantly different overall risk-return characteristics which should be consider before investing.
The information in this material may contain projections, market outlooks or other forward-looking statements regarding future events, including economic, asset class and market outlooks or expectations, and is only current as of the date indicated. There is no assurance that such events, outlook and expectations will be achieved, and actual results may be significantly different than that shown here. The duration and characteristics of past market/economic cycles and market behavior, including any bull/bear markets, is no indication of the duration and characteristics of any current or future be market/economic cycles or behavior. Information on historical observations about asset or sub-asset classes is not intended to represent or predict future events. Historical trends do not imply, forecast or guarantee future results. Information is based on current views and market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.
Discussions of any specific sectors and companies are for informational purposes only. This material is not intended as a formal research report and should not be relied upon as a basis for making an investment decision. The firm, its employees and advisory accounts may hold positions of any companies discussed. Nothing herein constitutes a recommendation to buy, sell or hold a security. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. Investment decisions and the appropriateness of this content should be made based on an investor's individual objectives and circumstances and in consultation with his or her advisors.
Neuberger Berman Investment Advisers LLC is a registered investment adviser.
The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC