The US presidential election is fast approaching, but some investors say it may not have as much of an impact on markets as people think. With just over two weeks until the election, the race appears to be in a “dead heat” between former President Donald Trump and Vice President Kamala Harris, according to the latest national poll from NBC News. In addition to recent signs that the stock market is pricing in a Trump victory, or even a landslide victory for the Republican Party, Trump has recently seen a resurgence in public opinion polls. Meanwhile, Harris’ popularity has waned somewhat since its peak over the summer. However, many investors are optimistic that the bull market will persist regardless of the election outcome, especially given the recent performance of major averages. Although the Dow Jones Industrial Average and S&P 500 fell on Monday, they each snapped six-week winning streaks and were the best gains of the year for both benchmarks. The S&P 500 index is up about 22% since the beginning of the year. History has shown that strong business results bode well for the post-election year-end economic boom. Sam Stovall, chief investment strategist at CFRA Research, said data dating back to 1944 shows that a premature performance in an election year usually means “further improvement” in November and December. “Thus, history suggests that during the final months of this unusually strong election year, active managers may go all out to match or exceed benchmark returns. But that’s not a guarantee,” Stovall said. The strategist said investors’ “hunger for growth” bodes particularly well for communications services, finance and information technology, but not so well for consumer staples, materials and energy. Scenarios Part of the reason investors expect elections to have little impact on stocks is due to their poor ability to predict how candidates’ policies have affected performance in the past. I am doing it. When Trump won the 2016 presidential election, investors expected the energy industry to do well, but the next two years turned out to be unfavorable for the industry. Meanwhile, renewable energy, a centerpiece of President Joe Biden’s 2020 campaign, has lagged throughout his presidency. The Invesco Solar ETF (TAN) has been declining for the past four years, including this one. “I think the lesson from that is that investors should not pay too much attention to politics and really focus on how industries and companies are changing and where consolidation is happening. ” said Alger CEO Dan Chun. Other market participants expressed similar opinions. John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, last week urged investors not to read too much into the possibility of the election going either way for the president, the House or the Senate. Ta. Of course, investors weighing the likely outcome of the election are betting that a Harris victory in a divided Congress could be bullish for stocks. With a Democratic-controlled House and a Republican-controlled Senate, any legislation is unlikely to pass, especially when it comes to raising personal and business taxes. Meanwhile, a Trump victory scenario may be welcomed by markets that are pricing in a Trump victory, but there are questions about how serious the former president is about imposing tariffs that could hamper global trade. Questions will arise. Risks from delayed results Indeed, one potential concern for investors may depend on how hotly contested the results are, and delayed results could lead to increased volatility. Monica Guerra of Morgan Stanley Wealth Management wrote this month: “We are emphasizing the possibility of a delay in the election results.” “In addition to the close race, fragmented mail-in voting and vote counting could keep the election in limbo for some time, which could lead to increased volatility,” Guerra wrote. The firm noted that after the 2020 election, the CBOE Volatility Index spiked 40% in the three days before a winner was determined. In the 2000 election, the swings lasted more than 30 days into December. “We encourage investors to keep their long-term goals in mind during periods of election-related volatility and position uncertainty,” Guerra wrote. Still, many investors aren’t waiting for clarity on the election results in hopes of a year-end bull market. “We’re not going to sit on the sidelines until the election and other things unfold,” said Ross Mayfield, investment strategist at Baird. “I would focus on uncertainty and leverage more risk-on types of sectors and assets.”
Some investors say election may not be as stimulative for markets as people think
