Investors More Optimistic on Harris Than Biden; Favor Trump Overall

Continuing a pattern from past elections, 61% of investors believe a victory by former President Donald Trump on November 5 would provide the best outcome for the stock market, according to a new survey released today by Investing.com. At the same time, investors seemingly view Democratic contender Vice President Kamala Harris more favorably than the party’s former candidate, President Joe Biden.

The survey found that while most investors still place their faith in Trump from an economic perspective, 23% feel that a Harris victory would be the best result for financial markets, up from the 16% of respondents in Investing.com’s 2020 pre-election survey who were bullish on the economic implications of a Biden victory.

However, when asked how the economic performance during the 4 years of President Biden’s presidency would impact Harris’ chances of getting elected, 55% believed it would hurt the Democratic nominee’s chances of getting elected, with just 22% believing it would help. Furthermore, 80% of investors say the current state of the economy, including inflation, affects their outlook on Harris as a potential presidential candidate (52% to a large extent and 28% to a moderate degree).

"Although the market and the Fed have already declared victory over inflation, the ghost of price rises still plays a key role in the average American's daily life and, consequently, in the decision-making process when choosing who to vote for," said Thomas Monteiro, senior analyst at Investing.com. "That is not only because wages have only now managed to grow faster than inflation but also because, with rates held at a high for an extended period, consumer credit is at a record high of $5.1 trillion - meaning that Americans are more indebted than ever."

On the flipside, 61% of investors believe that the economic performance of Trump’s previous presidency helps his chances on Election Day. Sixty percent also agree that Trump’s foreign policy would have a positive impact on the economy, compared to only 28% for Harris.

Additionally, the survey reveals investors’ expectations for the economic implications of the election across sectors. Seventy one percent believe that oil and gas stocks would perform the strongest if Trump is elected, followed by cryptocurrency (46%), defense (46%), industrials (39%), technology (37%), real estate (35%), and finance companies (35%).

Meanwhile, investors anticipate that a Harris victory would yield the most significant boost in the market for renewable energy (52%), electric vehicles (47%), healthcare (40%), technology (30%), and defense (28%).

"Although each candidate may benefit a different sector of the economy more centrally, the outlook for the S&P 500 should remain optimistic regardless of who wins for reasons that exceed politics," said Monteiro. "Against this backdrop, the sweet spot for the market would be having a divided government, as that would diminish the particular risks associated with each candidate - that is, higher corporate taxation for Harris and an ad-hoc China policy for Trump. This holds particularly true given that the market seems to have looked past these risks so far."

In some of the key battleground states that could swing the election, results varied considerably with the likes of Arizona and Nevada believing Harris to be a much closer competitor to Trump when judging the outcome of the economy, while the likes of Ohio and Florida were even more bullish on Trump than the national average.