Don’t expect a Biden bump to become a Biden boom.
While a Democratic victory in Tuesday’s presidential election could give stocks a temporary boost, market strategists say Wall Street will likely be happier with more of what Republicans have delivered.
A Joe Biden win could boost share prices in the short term given that he’s likely to champion a big stimulus package to address the raging coronavirus pandemic. But a Democratic sweep could spark a selloff further down the line as elites try to cash in before Biden ushers in higher taxes for the rich and stricter regulations, experts told The Post.
“Later on, it may dawn on people: Well, we got the stimulus package, that’s great, but we also have a situation where the most pro-business administration in decades, arguably, that’s going away,” said Chris Rupkey, chief financial economist at MUFG Union Bank.
Stocks posted a strong rally in the final session before Election Day, with the Dow Jones industrial average climbing 422.86 points, or 1.6 percent, to 26,924.46 on the heels of its worst week since March.
With Biden comfortably ahead of President Trump in national polls, Monday’s gains suggested confidence among investors that it won’t take too long to determine the winner — and that whoever is inaugurated in January will deliver another stimulus package to shore up the pandemic-battered economy.
“In a perfect world we’ll know on Wednesday who the next president of the country’s going to be, or at least the administration, and that bodes well for that stimulus trade,” said Anthony Denier, CEO of the trading platform Webull. “It’s really everyone giving a big sigh of relief that the election is finally here.”
But Wall Street would likely be more enthusiastic about Trump signing that stimulus bill while keeping taxes low and regulation limited in a second term — policies that are generally friendly to stock prices, analysts say.
Biden, on the other hand, could spur selling by pushing liberal policies such as a public health insurance option, higher taxes and more regulatory pressure on Big Tech firms, according to market observers — though that will all depend on which party controls the Senate.
“The concern over tax hikes for corporations and capital gains tax would be a non-starter with a Republican Senate,” said Quincy Krosby, chief market strategist at Prudential Financial.
But Biden has been ahead in the polls for weeks and “the market hasn’t blinked” at the possibility of his proposals becoming reality, said Lamar Villere, partner and portfolio manager at Villere & Co.
Elections themselves also don’t have major long-term influences on the market’s movements, analysts said. For instance, the Dow ended Monday about 36 percent above where it was on the first trading day after Trump’s inauguration, not far from the 33 percent gain in the comparable portion of President Barack Obama’s second term.
“The only real concern is that you have an ugly contested election and prolonged uncertainty,” Villere said. “But our take is that we’re not going to see a huge swing one way or the other, and generally it’s not going to be a meaningful event as far the market’s concerned.”