Election Day is just a week away, and regardless of who wins the White House or which party controls Congress, the outcome will have wide-ranging implications for markets. Stocks are in an unusually strong position ahead of the U.S. presidential election on Nov. 5, with all three major stock averages at or near all-time highs despite rising U.S. Treasury yields. On Tuesday, the Nasdaq Composite Index hit a new record for the first time in three days. But either way, the latest NBC News poll shows that the Nov. 5 result could spook markets, especially after the unusually close race between former President Donald Trump and Vice President Kamala Harris. There is. “Regardless of the outcome of the election, there will certainly be a lasting impact on both U.S. and global markets,” Mike Malaney, director of global market research at Boston Partners, said in a recent paper. . The candidates’ policies could not be more different. In addition to toughening tariffs and mass deportations of illegal immigrants, President Trump has promised significant tax cuts for businesses and individuals. Harris has promised to raise taxes on corporations and the wealthy and increase spending on housing and health care. However, both would implement policies that would increase the already ballooning budget deficit. Perhaps bond investors sensed this concern, with the benchmark 10-year Treasury yield at one point rising to nearly 4.34% on Tuesday. Here’s how stocks react to different outcomes. Trump wins regardless of Republican landslide victory If the Republicans win an uncontested Congress and Trump wins, the stock market is expected to be bullish. It appears that the market has already priced in this outcome. Not only are the average prices of the three major stocks at or near all-time highs, but banks in particular are outperforming, which further strengthens Trump’s cyclical leadership if he wins the November election. It shows that. Since the start of the fourth quarter on October 1st, the SPDR S&P Regional Banking ETF (KRE) is up nearly 5%, leading the S&P 500 index by just over 1%. Julien Emanuel, a senior managing director who heads Evercore ISI’s equity, derivatives and quantitative strategy team, said the vote led to a “melt-up of ‘performance-seeking'” that would see the S&P 500 index rise above 6,000 and move closer to it after the election. I expect it to be possible. 6,300 by the end of the year. Other market participants also expect a landslide Republican victory to be bullish for stocks. “If we get Trump in a red sweep, we’re going to experience this cyclical pile-on,” Warren Pais, co-founder of 3Fourteen Research, said Friday on CNBC’s “Closing Bell.” spoke. He said the market “could be in indigestion” at first glance, adding: “Then, all of a sudden, everyone realizes, nominal GDP is going to be very strong. So let’s buy this market.” he said. If Trump wins but Congress is divided, the S&P 500 will likely remain sideways in the days following the election, Emanuel wrote. But in this case, a “market melt-up” scenario is most likely, with the S&P 500 index potentially surging above 6,450 during the already seasonally strong months of November and December. Harris’ victory regardless of Democratic landslide victory Harris’ victory, which includes landslide wins in both the House and Senate, is expected to act as a negative surprise for markets in the days following the November 5 election. There is. Evercore ISI expects the S&P 500 index to fall to about 5,700 in the 10 days after the election as the market reassesses expectations. But even under this scenario, the market-wide index is still expected to soar to nearly 6,200 by the end of the year. “I think there will be an opportunity to leverage capital after the election,” Jeff Schultz, director of economic and market strategy at ClearBridge Investments, said on a media webcast last week. Mr. Paiz, co-founder of ThreeFourteen Research, expects Mr. Harris’ victory to lead to a decline in cyclical and small-cap stocks and encourage investors to focus on blue-chip tech stocks. He expects bond yields could fall from their highs. However, a Harris victory amid a divided Congress could accelerate the S&P 500’s immediate post-election decline, sending it down to about $5,525, according to Evercore ISI. The results suggest that if the election results were only slightly contested, the S&P 500 could end the year largely unchanged, but there is a risk that the election results would be highly contested and disrupt the transfer of power. If there is, it could probably fall to 5,675. Evercore ISI’s Emanuel said in January:
How the stock market is likely to react to election results
