U.S. stock investors should brace for seasonal weakness in the third quarter of an election year, according to BTIG’s equity strategy team.
Analysts at the brokerage highlighted a pattern of underperformance in equities during the third quarter of years preceding a U.S. presidential election. The firm cited historical data showing that the S&P 500 has, on average, posted modest losses in this period, reflecting investor caution ahead of heightened political uncertainty.
BTIG’s warning comes as markets already grapple with a range of macroeconomic pressures, including inflation concerns, Federal Reserve policy uncertainty, and geopolitical risks. The strategists noted that election-related volatility often exacerbates existing market fragilities, particularly in sectors sensitive to policy shifts.
While the firm did not specify a target for market declines, it emphasized that the seasonal trend has been a recurring feature over multiple election cycles. The third quarter of 2024, which includes the November presidential vote, may see increased caution from investors seeking to mitigate risks ahead of potential policy changes.
The warning follows recent mixed signals from corporate earnings and economic data, which have done little to dispel broader market jitters. BTIG’s advisory underscores the importance of risk management strategies for equity portfolios as the election year progresses.
