Investing.com – Evercore ISI takes a fresh look at the US stock market in the run-up to the November presidential election after President Joe Biden passed the torch to Vice President Kamala Harris to lead the Democratic Party.
The second failed assassination attempt on Republican candidate Donald Trump ahead of a historically close presidential election is a sign that political uncertainty is likely to persist.
From a political perspective, while Harris’ rise to the top of the Democratic ticket has tightened polling and made the presidential race a toss-up, Evercore ISI is largely sticking with its previous winner/loser sectoral calls for Harris and Trump victories, since there haven’t been many material changes to Politics front.
While a century of returns show the United Government handily outperforming the Divided Government, the country’s sharp partisan divisions make 2025 a year in which stocks are likely to outperform if the government is split, as is currently the case.
However, if a Harris/Blue sweep occurs, Evercore ISI sees the likely winners as renewables/EVs, with the Harris administration continuing to implement IRA and other clean energy policies, and health insurance companies taking advantage of the ACA/Medicaid, given Harris The administration will continue its efforts to enhance enrollment in these programs.
At the same time, Harris’s potential losers include sectors where the Biden administration’s tougher regulatory approach is set to continue, including the financial sector, gas/coal-based utilities, prescription drugs, and insurers that rely on Medicare Advantage.
However, we note that Harris will largely represent a continuation of the status quo, and federal courts are increasingly examining executive branch regulatory actions across a range of areas, so it is not clear how large a net new impact Harris will have across systems.
Evercore ISI said that since Harris replaced Biden at the top of the Democratic ticket, two of her policy ads have received some attention, but it is not clear that either will ultimately matter much.
First, Harris called on Congress to enact a federal ban on “price gouging” in the grocery sector, with few details on what specifically that might entail.
Second, to pay for housing and the “care/opportunity economy” proposals, Harris said she continues to support most of the tax increases Biden has proposed in his annual budgets, including higher taxes on corporations and higher-income households — though she will not do so. We will not go as far (28%) as Biden suggested (39.6%) on increasing the capital gains tax.
“Enacting Harris’ proposals in these areas would require legislation and is likely only possible in a Democratic sweep scenario,” Evercore ISI said, which it currently considers to be a 1 in 10 chance, given the makeup of the 2024 Senate races is so tight. In favor of Republicans.
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