That’s the message from Wall Street pros as investors brace for a close 2024 presidential election.
So far this year, the S&P 500 (^GSPC) has rallied 20%, making 2024 the best Election Year through October since 1936. But that outperformance could be at risk, at least in the immediate term, as the too-close-to-call race is largely expected to trigger market volatility.
Predictions market Polymarket currently shows a 59.5% chance that Donald Trump will win the election, and that’s prompted a return of the so-called Trump trade. Treasuries dropped and gold soared once again this past week as investors bet that Trump’s proposed policies surrounding tariffs and tax cuts could prove to be inflationary.
“The key for markets will be certainty in the outcome from which to understand economic impacts and evaluate implications for the trend of economic growth and evaluation of sector winners and losers,” Rob Haworth, US Bank Wealth Management senior investment strategist, told Yahoo Finance.
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Given the key themes that have emerged from Trump’s and Harris’s respective campaigns, I asked a number of strategists what a Republican versus Democratic presidency means for business and Wall Street and narrowed that list down to three trade ideas under each scenario.
Financials is viewed as a top trade under a Republican presidency on the expectations for looser regulation and increased M&A activity.
According to a recent note from Fitch Ratings, a July 2021 executive order under the Biden-Harris administration encouraging greater scrutiny of mergers has impeded deal activity — guidance that is expected to change under Trump.
“While no proposed mergers have been formally denied since the directive took effect, approval times have increased markedly and, in some cases, to the point of making deals non-viable, as market conditions turned during the review period,” Christopher Wolfe, head of North American banks for Fitch Ratings, wrote in a note.
UBS Global Wealth Management ElectionWatch co-lead Kurt Reiman told me financials stand out as a “key beneficiary” in both a Red sweep scenario (meaning Republicans control the White House, Senate, and House) and a Trump presidency with a split Congress.
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Reiman said a looser regulatory environment could lead to lower costs and greater ability to return capital to shareholders, as well as a higher likelihood that consolidation in the financial services industry would face less resistance.
On the flip side, Reiman and his team see Democrats controlling the White House, Senate, and House as a “worst-case scenario” for financial services due in part to the probability of greater support for the Credit Card Competition Act — a bill he views as ushering in new regulations and stricter interpretations of current rules.
Bank of America’s Jason Kupferberg echoed a similar sentiment. In a recent note to clients, Kupferberg and his team wrote that a Democratic sweep would be a “worst case scenario” for the payments sector for two reasons: higher probability of a tougher stance on the DOJ’s lawsuit versus Visa and the potential for new laws to lessen Visa’s (V) and Mastercard’s (MA) competitive edge in the US.
The expectation of higher spending under a second Trump administration has sent gold (GC=F) prices to record highs. The precious metal closed the week at $2,734.44 an ounce, bringing its year-to-date gains to 34%.
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And the run may be far from over, according to Wealth Alliance president Eric Diton.
“We just don’t have a plan as a country to deal with our $35 trillion in debt and growing … I haven’t heard any talk about any kind of reduction in spending from either candidate,” Diton told me.
While neither candidate seems to have a plan to address the country’s ballooning deficit, a recent analysis from the Committee for a Responsible Federal Budget estimated Trump’s policies could add $7.5 trillion to the national debt over the next 10 years, compared to $3.5 trillion under Harris.
Managed-care insurers could see some relief under a second Trump administration due to the likelihood of greater support for privatized programs like Medicare Advantage — an approach long preferred by Republicans.
And that could give a boost to companies like Humana (HUM), UnitedHealth (UNH), and CVS (CVS).
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Oppenheimer’s Michael Wiederhorn named Humana as the firm’s “best idea” for a Republican sweep, noting that Medicare Advantage beneficiaries account for 87% of the company’s premium revenue.
“The key ways that a Republican regime could support Mastercard include strong rate increases and a favorable regulatory environment,” Wiederhorn noted.
It’s a pivotal election for the electric vehicle industry, and not just because of Trump’s close ties with Tesla (TSLA) CEO Elon Musk. Rather, the former president’s promise to roll back the Biden administration’s EV policies on “day one” could have significant implications.
“This week’s election, and the potential shift in government regulations based on who wins, will be more consequential to the automotive industry than any previous election,” iSeeCars executive analyst Karl Brauer said in a statement.
Earlier this year, RBC’s Tom Narayan told me Trump’s “erratic” behavior during his first term left the auto industry uneasy, and they view his past threats as a potential challenge to their business if he were to be elected.
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On the other hand, Harris has been supportive of the current administration’s efforts to expand access to EVs. She’s largely expected to extend the Biden-era $7,500 tax incentive for new EVs and $4,000 for used EVs — a credit that Guggenheim’s Ron Jewsikow has told me is a “key affordability enabler.”
Wedbush’s Dan Ives sees a Harris ticket as a positive for General Motors (GM), Ford (F), Stellantis (STLA), and the EV industry more broadly, including Tesla.
Harris’s promise to support the housing market and make home affordability a centerpiece of her economic agenda is a bullish sign for homebuilders, according to Oppenheimer.
The team, led by analyst Tyler Batory, sees Harris’s plan to build three million new housing units and improve housing affordability as a key catalyst for the sector. The team named D.R. Horton (DHI) a top housing play, making the case that the stock is “uniquely positioned” given its focus on entry-level housing.
“The company’s lower ASP (pricing) should benefit from increased demand from a tax credit, and its scale would allow further ramping of home production,” Batory wrote.
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In the company’s third quarter earnings call, D.R. Horton CEO Paul Romanowski warned affordability and election uncertainty had prompted “some buyers to stay on the sidelines in the near-term,” sending ripples across the industry. The SPDR S&P Homebuilders ETF declined 1.6% for the week, bringing its one-month loss to -8%.
More social support under a Harris administration will boost off-price retailers, according to Evercore’s Michael Binetti.
“A blue sweep would likely benefit the lowest income consumers and within our space, Burlington Stores has the lowest income demographics and a bigger margin opportunity than Ross Stores,” Binetti wrote.
Off-price retailers have outperformed this year as consumers hunt for value amid sticky inflation. Burlington Stores (BURL) posted better-than-expected earnings and raised its outlook during its most recent quarterly report, while Ross Stores’ (ROST) value offerings helped boost sales by 7%. Shares of Burlington have soared 100% over the past year, while Ross has jumped 21%.
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email seanasmith@yahooinc.com.
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Consumer confidence has plunged among traditionally optimistic younger adults amid fears for their personal finances and the wider economy, figures show.
GfK’s long-running Consumer Confidence Index remained unchanged at an overall score of minus 23 in June.
However, the analyst said this was was “misleading as, beneath the surface, there are new signs that confidence is weakening”.
Source: GfK
Neil Bellamy, consumer insights director at GfK, said: “The biggest fall this month is among those aged 16 to 29, traditionally one of the most optimistic groups.
“Here confidence has dropped 11 points over the past month to minus two, the lowest level seen for two years, driven by large falls in views on both their own personal finances and the wider economy.
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“More broadly, there are now no demographic groups with a positive confidence score, including higher-income households earning £50,000 or more, who have slipped back into negative territory as of June.
“Confidence remains subdued and vulnerable to further economic or political uncertainty.”
Sourve: GfK
Overall, confidence in personal finances over the coming year remained flat at minus two, four points lower than this time last year.
The measures of both personal finances and the economy over the previous 12 months were both slightly down, by two points and three points respectively, “reflecting the sense that things have been extremely tough over the last year for so many”, GfK said.
The only measure to increase was expectations for the wider economy over the next 12 months, up two points to minus 36 but still eight points below this time last year.
The major purchase index, an indicator of confidence in buying big ticket items, remained at minus 20, four points lower than June last year.
“Ships of the World, start your engines. Let the oil flow!” said Donald Trump on social media after he announced the signing of an interim peace deal with Iran on Sunday. Under the agreement – which Iran acknowledged included a 60-day negotiating period for a final deal – the president said that following retrieval of mines, there would be a “toll free opening” of the Strait of Hormuz.
But many of the finer details remain “unclear”, said The Guardian. There are questions over the “exact timing of the reopening of the maritime route, who will oversee safe passage and whether any conditions will be applied”.
Financial markets have welcomed the announcement, but further volatility could yet hit people’s pockets.
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Have oil prices changed?
The price of oil fell to about $83 (£62) per barrel following Sunday’s announcement, its “lowest since the early days of the war”. Then on Tuesday it dipped below $80. In February, before the first missiles struck Iran, each barrel cost around $73. The price peaked at around $120 at the height of the conflict.
Prices are expected to fall in the wake of a prolonged ceasefire, and there are “real grounds for optimism”, said Politico. Damage to oil-specific infrastructure has been “limited”, meaning it could take “as little as six weeks to resume outflows”.
“So that’s the energy crisis sorted, right?” Not so fast.” A combination of damage to wider infrastructure and the continued closure of the Strait of Hormuz has meant roughly 12 million fewer barrels of oil have been produced each day. And they “won’t magically reappear on the market even if the pact holds”.
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Will this continue?
The “first big test” of the deal will be whether shipping companies will have enough “confidence” to return the use of the strait to pre-war levels, said The New York Times. If successful, this will free the 250 tankers and 330 cargo ships trapped in the Gulf, according to the BBC, and transport oil around the world. Oil and gas producers in the Gulf nations would then need to re-establish “wells, refineries and other infrastructure”.
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Even if all of that were to materialise, European and Asian countries who have historically depended on oil from the region “will face a long wait”. Processing oil takes considerable time. “It is unlikely that the prices of gasoline, diesel and other fuels will return to pre-war levels anytime soon.”
What about inflation?
Despite air fares “surging” and fuel costs “tipping higher”, UK inflation remained at 2.8% in May, said The Independent. This was a “surprise” to economists, who had widely predicted a rise to 3% and “perhaps even beyond” due in part to the war in Iran.
Remaining at this level could imply that the “cost-of-living squeeze will not play out as badly as had been anticipated” earlier this year, even if the “Iran war sent energy costs spiralling”. However, prices are set to rise again later in 2026, leaving savers to make sure their investments are earning an interest rate “well above the rate of inflation”.
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What does this mean for consumers?
Food prices in the UK look to be rising more slowly. Should the Strait of Hormuz open freely, fertiliser, which has “soared in costs” and put pressure on farmers, could fall substantially, said the BBC. Jet fuel has already seen a “small fall in price”, with Northwest Europe jet fuel trading at $1,033 (£780) per tonne, compared with $831 pre-conflict and around $1,840 at its peak.
How will businesses be affected?
Beneath the “encouraging headlines” about inflation control, there is a “hidden crisis for businesses”, said The Telegraph. The Iran war triggered one of the largest energy shocks in history, meaning businesses were “swallowing soaring costs to spare shoppers”.
“Input rises” for producers climbed by “8.7% year on year in May”, larger than the 7.9% in April and the highest in more than three years. On the bright side, this means the economy may avoid a dreaded “wage-price spiral”, but conversely lower margins could lead to increased pressure on the employment market.
Hong Kong graduates believe the city’s finance industry is its most attractive and stable sector, making them more optimistic about career opportunities than their global peers, according to a study by the CFA Institute, which trains investment managers.
The US-based institute’s “2026 Graduate Outlook Survey”, released on Wednesday, found that 71 per cent of Hong Kong graduates rated their career prospects between eight and 10 out of 10. The global average for that level of optimism was 59 per cent.
The graduates’ view of careers in finance reflected “both the sector’s resilience and Hong Kong’s continued strength as an international financial centre, which ranks third worldwide and first in Asia-Pacific”, the institute said in a statement.
The findings also indicated that young people were confident about Hong Kong’s role as an international financial centre, resilient amid global uncertainties, and strategically focused on improving skills, it said.
That confidence was “deeply grounded”, it said, with nearly 90 per cent believing they had the skills to succeed and clearly understood what employers were looking for, notwithstanding the wider adoption of artificial intelligence in the city.
“Rather than viewing AI as a threat, 38 per cent of Hong Kong graduates believe it has no negative impact on their job hunting, and 37 per cent believe it makes securing a job easier,” the institute said. “Three quarters are already actively using AI tools in their job applications, demonstrating a proactive, tool-first mindset.”
