Stocks roared higher in a delayed relief rally on Thursday, following the Federal Reserve's jumbo-sized interest rate cut Wednesday, but rocky times may be ahead – and investors will want to prepare for that volatility. Excitement over the central bank's half-point rate cut lifted the S & P 500 over the 5,700 threshold for the first time ever on Thursday. However, Goldman Sachs warns that investors should buckle up for a potential bumpy ride in the market.
"On average, over the past 30+ years, [the CBOE Volatility Index] has increased 6% from September to October, and we see upside risks to the current VIX levels given seasonality and upcoming macro/micro catalysts," wrote analyst Arun Prakash in a Thursday report. Key catalysts that could shake up the markets include the third-quarters earnings that will be reported in October, the Nov. 5 general election and the final two Fed meetings of 2024, in November and December, Prakash's team said.
"Election years, especially leading up to the big vote in November, tend to be a little more volatile and this year has been no exception," said Rafia Hasan, chief investment officer of San Francisco-based Perigon Wealth Management. Recalibrate for risk Protecting your portfolio from sharp losses begins with understanding your comfort with risk and ensuring that your asset allocation reflects your long-term goals. "Staying in your seat and keeping clients invested in those periods is very important, but so is structuring the portfolio i.