With the U.S. election about two weeks away, who wins the White House and Congress could have an impact on key corners of the stock market, Bank of America said. “Accelerating profits are far more important than who occupies the Oval Office,” the company wrote in a note on Friday. “But politics can make or break a subsector.” With that in mind, as Nov. 5 Volatility is expected to rise as the election approaches, and Bank of America strategists say it’s now a stock-picking market. “Now is not the time to buy the index with your eyes closed,” the investment bank said. Here are some of the ways Bank of America analysts believe the outcome of the upcoming election could impact the stock market. Harris Presidency, Divided Government Bank of America analyst Justin Post said a White House win for Democratic candidate Kamala Harris, combined with a Republican-controlled Congress, could be the “best outcome” for online media companies. He noted that Harris’ potential ban on TikTok could give a boost to Meta Platforms and Snapchat. Meta-Platform 2024-Year-October “While the Democratic-led (Department of Justice) will likely continue to bring more antitrust pressure on the Big Three (GOOGL, META, and AMZN), a divided Congress is unlikely to pass legislation, Because it may change the current operating environment,” Post wrote. Meanwhile, analyst Lorraine Hutchinson said Harris’ plan to raise the corporate income tax to 28% from the current 21% could create headwinds for riskier domestic retailers. Hutchinson said that during Donald Trump’s first term, his corporate tax rate cuts (the reverse scenario) caused most businesses to reinvest savings back into their operations. Stocks facing this risk include apparel retailers such as Lululemon Athletica, American Eagle Outfitters, Gap and Urban Outfitters. Beauty retailer Ulta and discount chain Five Below could also be hurt, analysts said. Analyst Joanna Gajuk said health care stocks such as Tenet Healthcare and Universal Health Services could also benefit, as Harris may work to expand Medicaid coverage, which would impact health care delivery It’s a boost for readers. To be sure, managed care companies will likely be negatively affected by changes to Medicare Advantage under Harris. “Democrats are more concerned about potential overpayments and imposing more regulations to govern how businesses operate,” Gayuk wrote. “The president does not need Congress to influence rates and regulations.” She added that UnitedHealth Group, Agilon Health and Humana may see some negative consequences from this case. Harris elected president, Democratic sweep Meanwhile, analyst Jessica Reif Ehrlich said Democrats’ sweeping control of the executive and legislative branches could lead to telecom and cable policy Significant increase in regulation. “In this case, we also believe media companies may not be able to engage in much-needed consolidation,” Ehrlich said, adding that Big Tech would also face tighter controls under Harris and a Democratic-led Congress. regulatory pressure. Internet analyst Post said that in this case, small media and e-commerce companies are potential winners. If the TikTok ban is implemented, Snapchat, Meta and Alphabet will also become winners in the short term. Meanwhile, tech companies centered on the gig economy, such as Uber and Lyft, are also at risk, he added. Analyst Jason Kupferberg said a Democratic sweep “would be a worst-case scenario” for the payments industry. “If the White House and Congress are aligned politically, it may be easier to pass new legislation,” Kupferberg said, referring to a credit card competition bill introduced by Democratic Sen. Dick Durbin that, if passed, would It will bring more intense competition to the U.S. credit card industry. President Trump, Divided Government Analyst Ebrahim Poonawala said a win for Republican candidate Donald Trump and a divided government would be the best-case scenario for bank stocks. “Given the reduced risk of burdensome regulation, the potential for a pickup in M&A activity (bank M&A as well as larger trading activity in the S&P sector), a Republican victory in a divided Congress should have a positive impact on bank stocks. As well as the dampening effects on economic activity Tax increases are less likely,” Poonawalla wrote. Analyst Dimple Gosai said this election scenario could also lead to a compromise on the Inflation Reduction Act and could lead to a win-win situation for both Democrats and Republicans – and investors do not expect the IRA under Trump to be completely abolished. For managed care stocks with ties to health insurance exchanges and Medicaid, a Trump presidency and a divided government could create headwinds, Gayuk said. She added that Trump could undermine Medicaid funding and enrollment. Additionally, Trump may demand an end to enhanced Affordable Care Act exchange subsidies, which are set to expire at the end of 2025. Congress may resist. According to Gajuk, the situation could have a negative impact on Oscar Health and Centene. On the other hand, analyst Post said gig economy companies including Uber and Lyft will view Trump’s election as president positively. “Republicans are seen as supporting the growth of high-growth industries, and a divided Congress is unlikely to pass new jobs legislation/restore the PRO Act,” he wrote. The Protecting the Right to Organize Act (PRO) is proposed legislation to Strengthen union rights and worker protections. Post added that e-commerce companies could also benefit from Trump’s proposed higher tariffs on China. In that case, deregulation and potential reforms aimed at weakening the Securities and Exchange Commission’s market structure rules would benefit diversity, said analyst Craig Siegenthaler development of financial companies. However, sweeping Republican control could lead to increased volatility and deficits for asset managers, brokers and exchanges. “This is likely to hurt most stocks other than CME/CBOE as they benefit from volatility,” Siegenthaler wrote. Analyst Ehrlich added that Live Nation Entertainment is the Justice Department’s The target of antitrust lawsuits, it will benefit from Trump and the Republican Party’s less aggressive stance on antitrust enforcement. Homebuilders are also at risk if Republicans sweep Washington. “We do see the risk that the construction industry relies heavily on foreign trade labor, and tightening immigration or deportations could create labor shortages,” analyst Rafe Jadrosich wrote. Meanwhile, more tax cuts and nearshoring — and the dollar Possible weakness – could help paperboard and packaging companies such as Smurfit WestRock, Packaging Corporation of America and Graphic Packaging. For retailers, the company said Trump’s proposed tariff increases on China would have the most negative impact on Skechers, Crocs and American Eagle Outfitters. —CNBC’s Michael Bloom contributed to this report.
ABOUT US
Our news website delivers comprehensive coverage on US news, economy, politics, and world events, ensuring you stay informed on the latest developments. We provide timely and accurate news to keep you updated on the most important stories. Stay connected with us for in-depth analysis and breaking news from around the globe.
Contact us: contact@realtimeheadlines.com
© Real Times Headlines - 2024 | All Rights Reserved