As the US presidential election approaches, markets are bracing for a tight race and a potential delayed outcome, adding to the uncertainty surrounding the Federal Reserve's upcoming interest rate decision. Investors are grappling with a flurry of catalysts that could significantly impact the markets in the coming weeks.

Volatility Looms as Investors Brace for Uncertain Outcomes

Tight Race and Potential Disputed Result

Polls continue to depict a close race between the two presidential candidates, with voters narrowly split both nationally and across the pivotal swing states. This has led to a heightened sense of uncertainty, as the likelihood of a disputed result could drag the vote count out for weeks or even months. Options markets show many on Wall Street staying defensive, with the S&P 500 wavering as the Cboe Volatility Index remains stuck above 20, a level that typically signals rising jitters.

Upcoming Fed Decision and Earnings Season

Adding to the market's positioning challenge is the number of additional catalysts surrounding the vote. Election Day will quickly be followed by the Fed's interest rate decision and Jerome Powell's press conference, where the central bank will provide details on its path forward. Furthermore, a significant portion of US companies are still due to report their earnings, further complicating the market's outlook.

Potential Policy Outcomes and Long-Term Equity Performance

With both US presidential candidates in a "dead heat" heading into the election, markets are bracing for a result that could lead to a wide range of policy outcomes. However, it is notable that, since 1933, equities have almost always risen by double-digits by the end of a president's term, regardless of their party affiliation, according to Seema Shah at Principal Asset Management.

Consolidation and Potential Volatility Ahead

According to Dan Wantrobski at Janney Montgomery Scott, US equities remain largely in consolidation mode ahead of this potentially historic week. Investors should expect "more choppy, range-bound trading" in the sessions ahead, as the markets are "teed up for either new highs (the primary trend is still bullish) or bigger drawdowns (overbought conditions remain, with some recent support levels broken)."

Corporate Highlights: Berkshire, Palantir, Nvidia, and More

The article also highlights several notable corporate developments, including Berkshire Hathaway's record cash pile and trimming of its Apple stake, Palantir's upcoming earnings report, Nvidia's inclusion in the Dow Jones Industrial Average, and new data from Viking Therapeutics on an obesity pill.

Navigating the Uncertainty: Advice for Investors

Seema Shah at Principal Asset Management cautions investors against allowing their political opinions to cloud their investing decisions, as this could lead to missed opportunities in the long-term. The article suggests that investors should take a cautious approach and expect more choppy, range-bound trading in the sessions ahead, as the markets are poised for either new highs or bigger drawdowns, depending on how the various catalysts unfold.