With the presidential election just two and a half months away, the candidates’ economic policy platforms are only now beginning to take shape. This late unveiling has some investors concerned about how each policy platform might impact the economy and financial markets.

As with all elections, the perceived stakes are high, and with greater political polarization in recent years, emotions are running as hot as ever. In this challenging environment, what do investors need to know in the months ahead to prevent their political concerns from negatively affecting their financial plans?

Financial markets have felt more fragile recently with investors concerned about the economy, the possibility that the Fed may be behind on cutting rates, and some disappointing tech earnings. Ironically, despite the market volatility last week, major indices were mostly unchanged from Monday to Friday. While they are down from their recent all-time highs, and there is heightened market uncertainty, the S&P 500, Nasdaq, and Dow are still up 13%, 12%, and 6% with dividends this year. This is a reminder that while market swings are never pleasant, looking past short-term volatility is the best way for investors to stay focused on their goals.

As the summer heats up, the stock market is experiencing its own heat wave in the form of rising volatility. Market uncertainty has climbed as investors rotate out of large cap technology stocks and into a broader array of sectors and styles, including small caps. Since their respective peaks in mid-July, the Nasdaq Composite Index has declined 7% and the S&P 500 is down about 4%. Meanwhile, the Russell 2000 index of small cap stocks has jumped over 11% since early July. What’s driving this rotation and how can investors maintain perspective on upcoming events?

To paraphrase Ernest Hemingway, shifts in the stock market often occur “gradually, then suddenly.” Over the past month, the market has rotated from large cap technology stocks to small caps and other sectors. Following the latest jobs report, however, global stocks experienced a sharp pullback due to concerns over the timing of Fed rate cuts, a weakening labor market, and disappointing tech earnings. Financial markets are on edge as investors adjust to a changing economic landscape.

From President Biden’s announcement that he will not be seeking re-election, to a rotation out of tech stocks and into small caps, recent events have added to market uncertainty. The S&P 500 recently declined 2.9% from its all-time high, while the Nasdaq pulled back nearly 5%. It’s natural for investors to be concerned about where the market is headed, especially as the presidential election season heats up and the Fed prepares for its first rate cut this cycle. However, history shows that it’s important for investors to stay focused on the long run and not overreact to every news headline. More than ever, staying levelheaded is the best way to achieve long-term financial goals.