Investing.com – Evercore ISI is taking a fresh look at the US stock market ahead of the November presidential election, after President Joe Biden passed the torch to Vice President Kamala Harris to lead the Democratic Party.
The now second foiled assassination attempt on Republican candidate Donald Trump, ahead of a historically close presidential election, is a sign that political uncertainty is likely to continue.
From a policy perspective, Evercore ISI is largely sticking to its previous sectoral winner/loser calls for Harris and Trump wins, while Harris’ climb to the top of the Democratic party has tightened the polls and turned the presidential race into a flop. that there have not been many material changes on the policy front.
While a century of returns shows that a United Government handily outperforms Divided, the country’s sharp party political divisions make 2025 a year in which stocks are likely to outperform if the government is Divided, as is currently the case.
However, if a Harris/Blue Sweep were to occur, Evercore ISI sees the likely winners as renewables/EVs, with a Harris administration continuing the IRA and other clean energy policies, and ACA/Medicaid funded health insurers, given the Harris crisis. The administration will continue efforts to encourage enrollment in these programs.
At the same time, Harris’ potential losers include industries where the Biden administration’s tougher regulatory approach will continue, including financial institutions, gas/coal utilities, prescription drugs and insurers using Medicare Advantage.
That said, we note that Harris would largely represent a continuation of the status quo, and that the federal courts are increasingly scrutinizing executive branch oversight actions in a range of areas, so it is not clear how large the net will be a new impact that Harris would have through regulation.
Since Harris replaced Biden atop the Democratic ticket, two of her policy announcements have received some attention, Evercore ISI said, but it’s not clear either will ultimately make much difference.
First, Harris called on Congress to enact a federal ban on “price gouging” in the grocery industry, with few details on what exactly this would entail.
Second, to pay for her housing and Healthcare/Opportunity Economy proposals, Harris has said she will continue to support most of the tax increases proposed by Biden in his annual budgets, including higher taxes on corporations and top-earning households — though she wouldn’t do. not go as far (to 28%) as Biden proposed (39.6%) on raising capital gains taxes.
“Advancing Harris’ proposals in these areas would require legislation and would likely only be possible in a Democratic Sweep scenario,” said Evercore ISI, which currently sees only a 1 in 10 chance given the makeup of the 2024 Senate races is extreme. favorable for the Republicans.
