NEW YORK, Jan 12 Reuters A U.S. presidential race that is about to heat up could add a fresh wrinkle to markets in 2024, as investors gauge the potential for postelection changes in fiscal spending, taxation and other policy areas.

For months, the Federal Reserve39;s monetary policy trajectory and the U.S. economy have consumed investors, with expectations for 2024 rate cuts by the central bank fueling an explosive stocks rally in late 2023 and putting the SP 500 within striking distance of a fresh record high.

The importance of those factors for asset prices is unlikely to wane anytime soon. But with the Iowa caucus set to kick off the statebystate nominating process on Monday, a potentially close race and sharp partisan divisions in the electorate could add unexpected twists to the path for stocks this year.

The election is introducing an extra layer of uncertainty, said Irene Tunkel, chief U.S. equity strategist at BCA Research.

This year39;s election is pointing toward a rematch between President Joe Biden, a Democrat, and former President Donald Trump, who holds a commanding lead over Republican rivals.

However, any narrowing of the Republican field following the Iowa caucus could also make for a more competitive race for the party39;s nomination, Goldman Sachs economics analysts said in a Monday note. Trump39;s lead in the upcoming New Hampshire primary would shrink to around 3 if the field narrowed to him and former South Carolina Governor Nikki Haley, they…