DWS is cautiously optimistic about the future of bonds and equities, but investors are facing a number of factors that could complicate trading. Some key questions revolve around moderating growth, inflation levels, Federal Reserve rate decisions, and geopolitical risks.
According to Björn Jesch, Global CIO of DWS, it is too early to call it a day as stock markets are expected to remain jittery.
Regarding moderating growth, DWS highlights that while the U.S. economy is losing some steam, it is not as much as expected due to generous public expenditure programs driving growth.
Inflation remains a challenge for markets, with DWS forecasting U.S. inflation to reach 2.8 percent by the end of 2024.
The investment firm also suggests that the European Central Bank may start cutting rates sooner than the Federal Reserve, as inflation is more of a concern in the U.S. The Federal Reserve is expected to make three cutting steps by March 2025, with both central banks only cutting rates if data allow.
Geopolitical concerns such as Russia’s aggression against Ukraine, Middle East escalation, and tensions between China and Taiwan are all factors investors need to consider when weighing geopolitical risks.
As investors continue to monitor the U.S. markets, they can consider exchange traded funds (ETFs) that track benchmark averages for market moves. Some ETFs to monitor for tracking the Dow, S&P 500, and Nasdaq Composite include DIA, DDM, UDOW, DOG, DXD, SDOW, SPY, VOO, IVV, SSO, UPRO, SH, SDS, SPXU, QQQ, QLD, TQQQ, QID, and SQQQ.