Wall Street's trading teams are thriving, and the election could drive even more activity.

 

As the chaotic 2024 election nears its end, major bank trading desks are anticipating a surge in activity that could solidify an already stellar year for Wall Street. Historically, trading volume increases the day after a presidential election, according to Jim DeMare, Bank of America's head of markets. He expects this year to follow suit.

This potential uptick could add to an impressive year for traders. In the first nine months of 2024, the five largest Wall Street banks — JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup — generated around $89 billion in combined fixed income and equity trading revenue. This figure represents a 5.5% increase from 2023 and marks the highest trading revenue recorded for that period.

Stuart Kaiser, Citigroup's head of equity trading strategy, expects investors to take on more risk after the election, assuming it concludes without significant complications. This could set up the U.S. equity market for a strong year-end performance.

The increase in trading activity this year has been driven by a variety of factors, including Federal Reserve rate cuts, geopolitical tensions, and uncertainty surrounding the presidential election. According to Barclays analyst Jason Goldberg, the wide range of potential outcomes in these areas has created volatility and opportunities for banks to capitalize on.

The U.S. election is currently viewed as the most volatile event remaining in 2024, followed by the October jobs report and Nvidia's third-quarter earnings. Some investors, like Dan Loeb of Third Point, are already positioning for a possible Donald Trump victory, anticipating benefits from his proposed policies that emphasize domestic manufacturing and deregulation.

Despite the potential for chaos to dampen trading, volatility is generally seen as a positive for trading desks, which thrive on short-term opportunities. As DeMare noted, trading desks focus on "moving" rather than "storing" positions.

 

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Yahoo!Finance" all rights reserved by the original author.