Michele, a senior strategist at JPMorgan, says the recent market downturn reflects growing investor concern over potential policy shifts under a second Trump administration. The sell-off has hit equities, bonds, and the U.S. dollar across key benchmarks.
- SPX dropped 3.1% in two days; DJIA fell 2.8%
- AAPL lost 4.7%; MSFT declined 3.9% amid tech sell-off
- US10Y yield spiked to 4.82% as risk aversion grew
- DXY surged 2.4% reflecting dollar strength and safe-haven flows
- Energy and consumer discretionary sectors declined 3–5%
- Market pricing now incorporates expectations of policy-driven volatility
A sharp correction in global financial markets this week has prompted JPMorgan strategist Michele to suggest that investors are reacting to the perceived risk of renewed political uncertainty tied to Donald Trump’s rising prospects in the 2024 presidential race. The SPX plunged 3.1% over two trading sessions, while the DJIA dropped 2.8%, with technology stocks bearing the brunt—AAPL shed 4.7% and MSFT declined 3.9%. The U.S. 10-year Treasury yield rose to 4.82%, signaling heightened demand for safe-haven assets amid volatility. The selloff coincided with a 2.4% surge in the DXY (Dollar Index), indicating capital flight from riskier assets as traders reassess macroeconomic policies. Michele emphasized that the market is not merely reacting to headlines but pricing in structural changes: proposed tax cuts, trade reevaluations, and potential regulatory rollbacks could alter long-term growth forecasts. He noted that current valuations in the tech sector, particularly for high-momentum names, now carry a premium vulnerable to policy disruption. The broader implications span multiple sectors. Financials saw modest gains on expectations of deregulation, yet energy equities weakened amid fears of disrupted supply chains and shifting environmental policies. Consumer discretionary stocks declined 3.5%, reflecting concern over inflationary pressures and fiscal instability. Market participants are now closely monitoring speeches, campaign developments, and legislative proposals for early signals of policy direction. With the first major election event approaching, the shift in sentiment underscores how political narratives increasingly influence financial outcomes. Institutional portfolios are adjusting exposure, with hedge funds reducing long positions in U.S. large-cap tech and increasing duration in fixed income.