In just three days, Americans will head to the polls or mail in their ballots to determine which presidential nominee – current Vice President and Democratic presidential nominee Kamala Harris, or former President and Republican presidential nominee Donald Trump – will lead our great nation. The next four years.
Taking into account that all three major stock market indices are ageless Dow Jones Industrial Average (DJI: ^DJI)With a wide base Standard & Poor’s 500 (SNPINDEX: ^GSPC)Growth is driven by inventory Nasdaq Composite (NASDAQ: ^IXIC)has risen to multiple record levels in 2024, and all eyes are on this hotly contested presidential race.
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While each candidate poses unanswered questions (and it’s no secret that Wall Street doesn’t like uncertainty), A.J A potentially larger issue looms larger for stocks.
Let me begin this discussion by pointing out that campaign promises are not always implemented. If the winner on November 5 faces a divided Congress, he is unlikely to be able to implement many of the policies he proposed during the campaign.
With that said, there are proposals on both sides of the political aisle that are causing concern on Wall Street.
For example, Harris proposed addressing America’s rapidly rising national debt by raising taxes on select groups. More specifically, Harris wants to quadruple the stock repurchase tax for public companies from 1% to 4%, increase the ordinary capital gains tax from 20% to 28%, and raise the peak corporate tax rate by a third, from a historically low level to 21%. %. % to 28%.
While all of these actions would increase federal revenues, they also have the potential to negatively impact the stock market. Buybacks have been a particularly useful tool used by America’s largest publicly traded companies to reward investors and boost their shares Earnings per share (EPS). apple The company has reduced the number of its outstanding shares by more than 42% since the beginning of 2013, which has had a significant positive impact on earnings per share.
Meanwhile, Trump wants to impose tariffs on US imports as a way to encourage domestic production. According to Trump, tariffs on Chinese products imported into the United States will reach 60%, with 20% tariffs on imports from other countries.
The problem with tariffs is that they have the potential to spark a trade war, which could raise prices domestically and disrupt supply chains. Tariffs can be a mixed bag when it comes to corporate profits.
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