U.S. presidential predictions and stock market forecasting

A majority of the stock strategies examined by CNBC expect Democratic candidate Joe Biden to win the US presidential race – but they are widely divided over what the stock election would mean.

Fourteen of 20 strategists surveyed by CNBC picked up a Biden victory over Donald Trump. Half of the 20 strategists expect the S&P 500 to decline in the first month following election day – although not all of those proposing a slide show have caught Biden. Five of the 20 expected a rally, four predicted a reach market, and one refused to respond.

Eight said they expect a 5% drop for the S&P 500 in the first month after the election – with three of those groups electing Biden, two electing Trump, and two predicting a contested election. . Two strategists predicted a 10% drop for the S&P 500 after the election – one of them capturing Biden, the other Trump.

CNBC offered the strategists anonymity in exchange for their views; 19 of the 20 respondents were based in the United States, with one based in the Asia-Pacific region. The email survey took place last week.

Some attributed a negative reaction from the market to Biden’s proposed tax policy.

“If Biden wins and the Democrats take the House of Representatives, the first major move in 2021 will be lower as the tax agenda takes shape,” said one analyst.

Another said the market reaction will depend on how the House of Representatives issues meat: “If Democrats win the House of Representatives with Biden winning the (White House), then a market rally is likely to get tougher than if Biden wins and the Senate remains Republican because he is less likely to pursue his tax agenda unchecked under this scenario. “

Only three participants expect a clear, undisputed Trump victory, with one saying it will be the battlefield state of Florida that will decide the future of the official president. “Trump will carry most of the red states, however I believe he will lose Florida (s) which will carry Biden to victory,” that person told CNBC.

While some market players are on edge because of Biden’s tax policy, others said they feel a broader response to the health crisis and proposed investments in clean energy and infrastructure could offset negative investor sentiment.

When asked what the market’s reaction to a Trump victory would be, 11 respondents said the S&P 500 could run 5%. Another five said the market would remain volatile. Some argued that while President Trump has been good for capital markets in the first term, the top for markets in 2021 will be limited because his restrictions on trade and immigration could hurt economic output.

A major risk for the markets remains its airy valuations, strategists said, with news on the fax front offering the only support for record-high markets.

Respondents were clearly concerned about the possibility of a contested election. When asked about the implications that such a conflict would pose for markets, 11 analysts predicted a decline of 5-10%, and five others said the selloff could be less than 10% on the S&P benchmark.

In 2000, the campaigns of President George W. Bush and Democrat Al Gore clashed over a repeat vote in the state of Florida. The Supreme Court intervened, and the game was finally settled for Bush in early December – more than a month after election day.

CNBC asked the 20 market watchers about where they expect 2020 to end for the S&P 500. The index ended last Friday at a record 3397.16.

Eight analysts cited a range of 3400-3600 as their December 2020 target for the index. Five required for a range of 3000-3200, which would mark a decline of between about 6-12% from current levels. Ratings and uncertainty about the coronavirus pandemic were cited reasons for that negative outlook.

Three strategists bought the S&P 500 finish above 3600. Two said it would come below 3000.

Analysts believe that anti-China sentiment in the United States has bipartisan support, but they said the outcome of the relationship would be different among the two candidates.

President Trump, they said, would intensify his anti-China stance after all. However, the pain would be felt more intensely within the technology sector than on the broader trade front.

A Biden presidency is expected to take a moderate approach to relations with China, several respondents said. Although Biden would continue to repatriate manufacturing tasks to the United States, the approach would be less confrontational, some predict.

As one analyst from the survey said, “Negotiations would return to the traditional diplomacy style.”