What is the worst possible outcome of Election Day for the markets? Analyst statements

There is little to split Donald Trump And Kamala Harris in the polls as voters move to cast their ballots in the 2024 presidential election – and the uncertainty weighs on the minds of investors in the financial markets.

Not to mention the races that will determine party control Senate and the House of Representatives, and thus how smooth the policy of delivering their platform is for anyone who enters the White House in January 2025: Trump the Republican or Harris the Democrat.

When a sense begins to emerge of who has won the day, and how much friction in Congress they face, the markets will react and pass judgment on the future path of the US economy by changing the prices and interest rates on stocks , bonds and shape the economy. like.

However, it could take some time before a final result is known – perhaps even days or weeks, depending on how close the results are, and therefore how many counts are locked in political and legal disputes that delay the process.

From a market perspective, what is the worst possible outcome of Election Day in the US? Newsweek submit the question to the experts.

This is what they said.

Eric Wallerstein, chief market strategist, Yardeni Research

The worst possible outcome is a contested election. Political stability underlies the demand for US assets. A contentious election that prevents a winner from being declared for an extended period would hurt stocks, increase volatility and trigger a rush to gold.

Richard Bernstein, CEO and Chief Investment Officer, Richard Bernstein Advisors LLC

The best outcome would be a peaceful, orderly transfer of power. The worst outcome would be the opposite.

Second, I would suggest that action by either party (President/Senate/House) would not be well greeted by the financial markets as it could lead to unfettered spending and/or tax cuts at a time when fiscal responsibility is desperately needed.

Bonus: The S&P 500 had the exact same total return under Obama and Trump (16.3 percent/year, based on inauguration dates), despite their huge policy differences. Presidents are not actually important to the market.

Peter Berezin, Chief Strategist, BCA Research

A Democratic sweep would be very negative for stocks as it would significantly increase the likelihood of higher corporate and capital gains taxes.

A Trump victory, accompanied by Democratic control of the House of Representatives, could also be viewed negatively, as it would smooth the wave toward higher rates without compensating tax cuts.

Paul Ashworth, Chief Economist for North America, Capital Economics

Worst outcome for the bond market: A clean sweep on both sides, opening the door for more debt-financed stimulus.

Worst outcome for stocks: Probably a Democratic clean sweep or a highly contested outcome.

Worst outcome for the dollar: Probably a Harris win or a highly contested outcome.

Worst outcome for the economy: a Trump victory.