With the presidential election just over a week away, and the candidates in a dead heat in the polls, Americans are in suspense about how their lives will change under a new leader.
Business Insider has prepared a five-part refresher amid the final stretch to unpack the impacts that either a Donald Trump or a Kamala Harris presidency could have on US consumers. This first installment is focused on the investment landscape.
Trump and Harris have each outlined policy proposals that would affect different parts of the stock market. The platform of whoever wins will also be crucial in determining the path of interest rates, which shape the bond market.
But they're not expected to have diametrically opposed impacts on everything, with both candidates seen as positive forces for crypto.
Detailed below is the latest research and commentary from top Wall Street strategists outlining how the market and investing landscape could shift under a Trump or a Harris administration.
The guide covers four asset classes and is divided between the impact Trump or Harris could have on each.
For equities, it's helpful to look at how both the micro (specific sectors set to be affected) and the macro (how the broader market will respond) could be influenced.
Much of the industry guidance for the stock market under Trump boils down to his proposed tax policies. Bank of America estimates his plan to cut the corporate tax rate to 15% from 21% would boost corporate earnings by 4%. How much it would influence each sector would ultimately depend on sensitivity to changes in the tax rate.
To that end, BofA says the consumer-discretionary and communication-services sectors — the areas most sensitive to tax-rate changes — would benefit the most. On the flip side, less exposed areas, such as utilities, real estate, and energy, would get the smallest boost.
For energy, specifically, Trump's pro-drilling stance — while supportive of industry activity — would likely lead to oversupply and lower oil prices, BNY Wealth says. That, in turn, would hurt corporate profitability in the sector and drag on stock prices.
It's also worth noting that energy was the worst-performing sector during Trump's administration.
Another area of the stock market seen as benefiting from a Trump win is financials. Allies of the former president have said he aims to unburden banks from many of the regulations that were imposed following the 2008 financial crisis, something that his first administration tried to do, with limited success.
Those looser regulations could also ignite a fresh wave of mergers and acquisitions, which would increase advisory revenue for big banks and help drive up profits from dealmaking.
Views on the full equity-market landscape are divided, particularly along partisan lines. Trump's proposed tax and regulatory policies are seen by his supporters as pro-business moves that would be good news for corporate profit growth and deal activity.
But Trump critics say his proposal for universal tariffs and steeper levies on Chinese imports — as well as a crackdown on immigration — would be inflationary, which could hold back stock prices. The nonpartisan Tax Foundation says the tariff plan, in particular, could hurt profit margins and put pressure on consumer spending.
Bank of America estimates that 60% tariffs on China and 10% on other countries would lower S&P 500 earnings per share by 3.1%. That would be a problem since earnings growth has long been the stock market's primary driver of gains.
"The conventional wisdom is wrong: Trump is not going to substantially cut taxes once in office; he is going to raise taxes by jacking up tariffs. To the extent that this dampens economic activity, it is bad news for stocks," BCA Research's chief strategist, Peter Berezin, said.
Just like with Trump, much of the guidance around the stock market under Harris involves her tax plan. Her proposal to hike the corporate tax rate to 28% from 21% would have an inverse effect on sectors.
That means consumer discretionary and communication services — the top beneficiaries under Trump — would be hit the hardest under a Harris administration, BofA says.
"Consumer discretionary stocks have underperformed the S&P 500 modestly since Harris' presidential candidacy was announced, perhaps reflecting concerns that a Democratic President could result in higher corporate taxes and employee wages," BNY Wealth said.
Financial firms could also feel a negative impact from both higher taxes and Harris' proposed regulatory tightening.
But there are bright spots. A Harris victory would likely benefit homebuilder stocks because of her proposal to build 3 million houses. Renewable-energy stocks would also likely see gains because of Democrats' favorable views of wind and solar energy.
Both sectors have outperformed in recent months during periods when Harris saw positive momentum in election polls.
The stock market has soared to records during Joe Biden's presidency, up more than 50% since his inauguration, and a Harris win would likely continue many of the policies that have supported the market.
Those include infrastructure investments and tax incentives to bring manufacturing jobs back to the country, such as in the semiconductor industry via the CHIPS and Science Act.
But BofA says Harris' proposed tax hike would also put downward pressure on corporate profits, with an estimated 5% earnings hit. Beyond that, a quadrupling of the stock-buyback tax to 4% could also take 1% off S&P 500 profits, the firm said.
With all these crosscurrents swirling, a neutral market outcome must also be assessed.
Capital Economics says it believes neither a Trump nor Harris win will mean all that much for stock prices because bigger trends — specifically, artificial intelligence — will shape the market's direction.
"Our upbeat projections for the stock market in 2024 and 2025 are predicated on a view that hype over AI will continue to fuel a stock market bubble," the research firm said. Capital Economics has a 2025 year-end target of 7,000 for the S&P 500, regardless of which candidate wins the election.
Meanwhile, Bank of America says that as long as corporate profits continue to grow, the stock market will rise regardless of who wins the White House.
The performance of the US bond market largely hinges on the direction of interest rates.
As interest rates rise, bond prices generally fall, and vice versa. And since presidential actions usually influence rates, the bond market will likely be shaped by what either Trump or Harris ends up doing.
A Trump win is seen as a scenario that would usher in higher interest rates, which would push bond prices lower. It ultimately boils down to inflation.
Economists see Trump's double-whammy proposals of mass deportation and universal tariffs as inflationary. And since the Federal Reserve's primary tool for fighting inflation is raising interest rates, bond prices would suffer if yields rose.
"Our assessment is that a Trump win would lead to higher US yields," Capital Economics said.
Forecasts from the Committee for a Responsible Federal Budget — a nonprofit think tank — say a wider deficit and an increasing pile of debt under a Trump presidency, compared with a Harris presidency, would also put upward pressure on interest rates. That would also hurt the performance of bonds.
Capital Economics says it expects interest rates to fall under a Harris win, which would be good news for bonds, as she likely wouldn't pursue certain inflationary policies like tariffs or immigrant deportations, which could fuel wage inflation.
Harris' policies, considered to be less inflationary than Trump's, would also likely allow the Federal Reserve to continue cutting interest rates, which would boost bond prices.
In a Bloomberg survey of institutional investors last month, 30% of respondents said they would add to their bond exposure if Harris won, while just 17% said they would buy more bonds if Trump won.
Additionally, 46% of respondents said they would reduce their bond exposure if Trump won, compared with just 23% under a Harris win.
A Trump win is seen as bullish for bitcoin and the broader cryptocurrency industry, as Trump has firmly embraced digital assets in recent years.
The Bernstein analyst Gautam Chhugani said bitcoin could hit $90,000 by December if Trump won the election, about 37% above its current level.
"Elections remain hard to call, but if you are long crypto here, you are likely taking a Trump trade," Chhugani said.
Harris has also embraced the crypto industry in recent months, though she's seen as slightly less bullish than Trump, given his public displays of support, including addressing crypto conferences and launching his own nonfungible tokens.
Yet Wall Street seems to think that a big case for bitcoin will remain intact no matter who wins. The US government debt pile is expected to grow regardless of who controls the White House. That scenario is among bitcoin's biggest bull theses.
"I'm not sure if either President or other candidate would make a difference. I do believe the utilization of digital assets is going to become more and more of a reality worldwide," BlackRock CEO Larry Fink said during his company's third-quarter earnings call.
Trump's tax plan and protectionist trade policies are expected to strengthen the dollar. This is the opposite of what the presidential hopeful has said he wants since a weaker currency makes a nation's exports more competitive in global trade.
These policies are expected to be inflationary, which would push interest rates higher and could prompt the Fed to tighten. Those climbing rates would then underpin dollar gains.
If Trump retakes the White House, "the dollar would probably rally sharply, at least in the near term, on expectations of higher US tariffs and interest rates," Capital Economics said in a recent research note.
A Harris presidency would continue the trends of a weaker dollar because of the "policy continuity" with the Biden administration, Capital Economics said.
Since Harris' overall platform is less expansionary, it's expected to drive less inflationary pressure and therefore keep the coast clear for the Fed to cut rates and stimulate the economy as planned.
That likelihood of lower interest would, in turn, push the dollar lower.
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