The stock market has risen throughout the presidential campaign, generating worries about whether the boom will continue depending on who wins: Vice President Kamala Harris or former President Donald Trump.
The S&P 500 has risen by more than 20% this year, matching its performance in 2023. This year, the Nasdaq has risen 23%, while the Dow Jones Industrial Average has grown 14%.
Experts are saying whether Harris or Trump is elected president, the market will likely rise upward throughout the next administration. However, they added that each candidate’s policies may favor different sorts of equities while offering distinct dangers.
Here’s what a Harris or Trump win could imply for the stock market:
How will a Trump administration affect the stock market?
Trump has pledged to prolong the corporate tax cuts enacted during his first term, which are set to expire in 2025. If approved by Congress and signed into law, the tax cuts would be part of an anticipated deregulatory agenda pursued by federal agencies under the Trump administration.
Experts predicted that the combination of low corporation tax rates and free regulation would boost company earnings and drive the stock market upward.
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“Taxes do have consequences. With the Trump administration, it will be like a cork coming out,” Peter Morici, a professor emeritus at the University of Maryland’s School of Business said.
Trump’s proposals would benefit sectors like oil and gas, as well as artificial intelligence. Meanwhile, other experts believe that if Trump removes the financial incentives put in place by Biden, renewable energy industries may suffer.
Callie Cox, chief market strategist at Ritholtz Wealth Management said, “The Inflation Reduction Act was a big deal for solar and electric vehicle stocks. Who knows what will happen if that policy is walked back?”
If Trump is elected, Trump Media & Technology Group, the Trump-owned parent business of social media platform Truth Social, may see its worth grow. The company’s stock price has more than doubled last month as the former president’s poll numbers have risen.
While Trump’s policy initiatives have the potential to improve the stock market, some experts believe they may potentially jeopardize market performance.
On the campaign trail, Trump proposed taxes of up to 20% on all imported goods. Economists widely expect such a program to raise consumer prices. Trump has also announced plans to deport millions of unauthorized immigrants, which some economists believe might lead to a labor shortage.
Last month, Trump recommended using the military to combat what he described as an “enemy from within.”
“If he starts using the military domestically and imposes a 20% tariff and becomes a draconian, anti-democratic figure, it will weigh terribly on the stock market,” Morici suggests.
How might a Harris presidency affect the stock market?
Stock prices would undoubtedly rise under Harris, as they have under President Joe Biden, but a potential increase in corporate taxation and strict regulatory enforcement could restrict the gains, according to some experts.
Corporations presently pay a federal tax rate of 21%, which Harris hopes to increase to 28%.
Reena Aggarwal, a finance professor and director of the Georgetown Psaros Center for Financial Markets and Policy said such a tax increase may stifle company profits and deflate the stock market. However, she added, it is unclear whether the proposal will eventually become law.
“I don’t think this can happen that easily It takes a long time,” Aggarwal said.
Aggarwal identified renewable technology as one area that will gain from Harris administration policy. When asked how the stock market would do under Harris, Cox replied that it would “come down to interest rates and earnings.”
The Federal Reserve normally raises interest rates to calm the economy and control inflation, but the approach frequently puts negative pressure on stock values.
The Harris campaign has proposed measures to reduce price hikes on everything from groceries to prescription drugs to housing.
These ideas include a government restriction on price gouging and a focus on market concentration, which the Biden administration claims causes high costs for consumers.
Finally, long-term stock market performance will most likely be determined by economic dynamics over which Harris or any president will have minimal control, according to Cox.
“I don’t think Kamala Harris could enact changes that have long-term effects on the stock market. If you’re a long-term investor, politics do not matter for your portfolio,” Cox said.
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