The debate for the US presidential election is intensifying. In the secondary market, US stocks have seen enthusiastic responses, and the three major stock indices have collectively risen.

Currently, Cisco, Fujitsu, LM Ericsson Telephone, Nokia Oyj, HPE, NEC, Juniper Networks, Ciena, Volkswagen, and Western Digital are in the project. In addition, there are several larger projects underway: 1) Amazon Inferentia ASIC, expected to launch in 2025; 2) Microsoft Maia, expected to launch in 2026.$S&P 500 Index (.SPX.US)$The S&P index has risen by 0.091% to 5482.87 points. Although the S&P index has fallen for nearly 400 trading days without exceeding 2%, Goldman Sachs recently pointed out that this situation may soon change.

Goldman Sachs analyst Oscar Ostlund believes that the options market usually starts pricing about three months before the election. Although it has not yet completely entered this stage, market volatility is expected to appear soon. With the approaching US election, market volatility is expected to rise, and the market should pay close attention to the potential impact of the election on the market.

Goldman Sachs: Election risks have begun to spread to the financial markets.

Today's televised debates may provide new clues to the market's view of the election's impact on the asset market. After surveying 800 global institutional investors, Goldman Sachs analysts concluded with three key points:

- Regardless of whether Republicans or Democrats hold power, the government will increase the spending freedom of the executive branch, which is undoubtedly a negative factor for the bond market.

- If Trump wins, regardless of whether the House of Representatives is divided or unified, the market believes that it will be beneficial to the stock market because this may mean that the Federal Reserve will adopt more dovish policies.

- Investors generally believe that the victory of the Democratic Party will not be beneficial to the US dollar, which may lead to a depreciation of the US dollar.

In short, every result is bad, but some results are good for stocks.

Goldman Sachs strategist Dominic Wilson analyzed in detail the four main election results of the US president and Congress that may affect the market in his election preview report. These four scenarios are Republicans sweep, Democrats sweep, Trump Administration division, and Biden Administration division.

Specifically,

1. Republicans sweep:

In the scenario of Republicans' sweep, Wilson believes that the stock market will rebound moderately, yields will rise, and the trade-weighted US dollar will appreciate. Because the Republican government may continue the expiring tax reduction measures and may further implement corporate tax reductions, bond yields may rise.

2. Democrats sweep:

Wilson believes that the stock market will moderately decline, the US dollar will moderately depreciate, and yields will rise. Because the expected Democratic government will implement larger fiscal stimulus measures, thereby pushing up bond yields.

3. Trump Administration division:

In this scenario, the stock market will moderately decline, yields will slightly rise, and the US dollar will have a significant upside. The strong response to the potential tariffs and fiscal austerity may have a negative impact on the stock market and yields.

4. Biden Administration division:

The stock market will perform flatly, yields will decrease, and the US dollar will weaken. If the reduction in new tariffs is less than expected, this will increase the upward space of the stock market and may push up yields rather than reduce them.

Goldman Sachs recommends that, although baseline estimates cannot provide a compelling reason to hedge equity risk exposure, investors should remain vigilant in the face of fiscal expansion and tariff risks. Strengthening the US dollar is considered a more reliable way to reduce the downside of the stock market, but yields may also be affected by tariff risks.

Editor / jayden