In this multi-election year, there are only two months left until the US presidential election. And at this critical moment of the campaign, the presidential debate between Vice President Harris and former President and Republican candidate Trump will take place on Tuesday local time.

For Wall Street, this standoff could add another layer of volatility at a time when uncertainties in the job market, interest rates, and geopolitics are making investors nervous.S&P 500 Index (.SPX.US)Just experienced the worst week since March 2023, last Friday's disappointing US employment report reignited concerns about the economy cooling down, and the stock index rebounded on Monday. From the perspective of policies related to taxes, trade, tariffs, and immigration, the following are the issues that investors will focus on in the debate.

Taxation

Trump has stated that he will reduce the corporate tax rate from the current 21% to 15%, vowing to make the 2017 tax law fully permanent and urging for updates to key parts of the law that has been fully passed by the Republican party. Meanwhile, Harris is pushing to raise the corporate tax rate to 28%. Her plan proposes to keep the tax rate unchanged for those with income below $0.4 million and increase taxes for those with higher incomes.

Trade and tariffs

Trump talked about imposing a 10% tariff on all goods and imposing higher tariffs on goods made in China. Although Biden announced earlier this year to increase tariffs on a range of Chinese imports, including semiconductors, batteries, solar cells, critical minerals, steel, aluminum, and electric vehicles, Harris' campaign message suggests that while she holds similar views, she believes that further rupture between the two largest economies in the world would not be beneficial. Goldman Sachs economists have said that if Trump wins, tariffs on goods and cars imported from China could come quickly, raising the effective tariff rate by 3 to 4 percentage points and raising the core personal consumption expenditure inflation rate by 30 to 40 basis points at its peak.

Immigration issues

Trump has said that he will directly deport undocumented immigrants. Harris supports an immigration agreement that includes building additional border walls. Meanwhile, the Democrats have closed the U.S.-Mexico border and rejected some asylum applications. According to a strategist from JPMorgan, any effective measures to restrict immigration that result in severe labor shortages could potentially be a driver of inflation and suppress economic growth. The performance of the Democratic Party has started to outperform the Republican Party, according to an index tracked by Goldman Sachs that follows trading strategies of both parties, just before and after Biden resigned as a candidate and backed Harris.

What does the data from election years show?

Election years are usually favorable for the U.S. stock market. Since 1960, the S&P 500 index has risen in almost every election year. The only exceptions were 2000 and 2008, which were affected by the bursting of the dot-com bubble and the financial crisis, respectively. In the most recent election cycle, this record looks even better. In the three election years since 2008 - 2012, 2016, and 2020 - the benchmark index has risen by at least 10%.

Taking a narrower perspective and focusing only on the last seven months of election years, similar results are obtained. According to data and analysis from the Stock Trader's Almanac, since 1950 in 18 presidential elections, the S&P 500 index has risen 16 times during this period. 2000 was an exception when the election result was delayed for 36 days, and another exception was 2008.

There is too much uncertainty.

Although Harris's approval ratings have surged in recent polls, market experts warn that the election could still be neck and neck until the last moment, and the results may not be announced until several days after the election, although this possibility is small. Experts point out that it is possible to have a disputed or close election result, as well as the method of mail-in voting, which takes longer to count than machine voting.

During the recount battle in the 2000 Florida election, as investors flocked to safe-haven assets, the S&P 500 index fell by more than 4%, the 10-year U.S. Treasury yield fell by 52 basis points, and the price of gold soared. The election could end in a protracted dispute or even worse, political violence, which is also a challenge that investors are grappling with. If this scenario occurs, especially if it also means uncertainty about the final result, it is expected that the market will be in a predicament.

What does the "fear index" imply?

Any major events that could impact the economy and disrupt the market could lead to trading volatility. Elections are no exception. The futures curve of the Chicago Board Options Exchange Volatility Index (VIX), also known as the Wall Street "fear index", indicates that the market volatility will increase after the election day on November 5.

In addition to the Chicago Board Options Exchange Volatility Index futures, investors trying to determine market sentiment before and after the election can now directly focus on S&P 500 index options related to the voting period. The S&P 500 index options on November 6th indicate that traders currently expect a higher likelihood of a significant drop in the stock index compared to the previous day.

Stocks to watch if Harris wins

Harris's victory is expected to benefit a range of industries including renewable energy companies, electric car manufacturers, and even utility companies. However, unlike Trump's more extreme rhetoric on trade and tariffs, the bigger bet associated with Harris is whether she can avoid a trade conflict with China.

The Democratic Party's positive stance on clean energy issues means that Harris's victory is good news for the entire industry, benefiting$Tesla (TSLA.US)$and$Rivian Automotive(RIVN.US)$ and TeslaWaiting for the electric vehicle manufacturers,Release of the new type of AI chip Xeon 6 for datacenters, symbolizing the determination to challenge competitors. Intel CEO Pat Gelsinger said that the Xeon 6 processor will provide better performance and efficiency for high-intensity datacenter workloads than its predecessor, reducing the required space for operators to one-third of the previous hardware.,Beam Global (BEEM.US),$Blink Charging Co. (BLNKW.US)$Electric vehicle charging network operators, as well as suppliers and battery manufacturers.

Solar energy stocks - including$First Solar (FSLR.US)$N/A.$Sunrun (RUN.US)$And$Enphase Energy (ENPH.US)$ fell nearly 9%. On the news front, JPMorgan lowered its target price for SolarEdge Technologies from $73 to $59. The bank said that demand for solar energy in European residences is still relatively weak, due to high channel inventory, low electricity pricing, and recent uncertainties related to elections. JPMorgan also lowered its target price for solar energy company Enphase Energy from $128 to $124. - It is expected to perform better under Harris' leadership, as Democrats support renewable energy.

Residential builders may also benefit. Harris proposes providing up to $0.025 million in down payment support for first-time homebuyers and suggests offering tax incentives for builders constructing first-time homes. She also calls for the establishment of a $40 billion innovation fund to stimulate innovation in housing construction. Pay attention $ D.R. Horton (DHI.US) $ rose more than 10% this week,N/A.Lennar Corp (LEN.US)And.$KB Home(KBH.US)$等股票。

Under the leadership of the Democratic Party, marijuana stocks usually perform well. Stocks worth paying attention to include$Tilray Brands Inc(TLRY.CA)$.,$Canopy Growth Corp(WEED.CA)$.,$Curaleaf Holdings Inc(CURA.CA)$.andadvisorshares trust pure us cannabis etf (MSOS.US).

The financial industry may have difficulty benefiting as the Harris administration is expected to continue strict regulation, imposing higher capital requirements on US banks such as Bank of America, JPMorgan and Goldman Sachs, and credit card transaction fee income will continue to be under pressure. Pharmaceutical companies may also face regulatory pressure as Harris proposes an annual limit of $2,000 for out-of-pocket costs for prescription drugs.

Stocks to watch if Trump wins

If trade tensions escalate, companies with substantial revenue exposure in China may face disruptions. Some well-known companies include The stock of NVIDIA (NVDA.US) will split 1:10 after market close on June 7 (Friday), and the price per share will drop to around $100. The lower price will make NVIDIA more likely to be included in the Dow Jones Industrial Average. ,$Broadcom(AVGO.US)$,Qualcomm (QCOM.US)Other chip manufacturers, $Air Products and Chemicals, Inc. (APD.US)$ And$Celanese Corp. (CE.US)$等材料公司， $Tesla (TSLA.US)$AndBorgWarner Inc. (BWA.US)Auto companies, as well asOtis Worldwide Corp. (OTIS.US) industrial enterprises.

Given that Trump has pledged to lift restrictions on domestic oil production, oil, gas, and traditional energy companies are seen as potential beneficiaries of a Trump victory. Stocks worth watching include$Baker Hughes(BKR.US)$N/A.$Sony(6758.JP)$ rose nearly 2% before the market opened, and its semiconductor division will cut spending by 30% over the next three years.,$ConocoPhillips (COP.US)$,Occidental Petroleum(OXY.US)and $Williams Companies, Inc. (WMB.US)$N/A.$Haliburton (HAL.US)$Company, $Devon Energy (DVN.US)$N/A., Companies, etc.

Clean energy and electric vehicle companies benefiting from Biden's 'Inflation Reduction Act' are expected to face challenges during Trump's term as he has indicated plans to completely overturn Biden's electric vehicle policy. Companies at risk if Trump cancels tax breaks for buyers include Tesla, Rivian, Lucid, as well as battery manufacturers and component suppliers.

Defense stocks are expected to perform better in the event of a Republican victory, as people anticipate that defense spending will be a clear priority for the Republican party. Stocks worth paying attention to includeLockheed Martin (LMT.US)N/A.$Northrop Grumman (NOC.US)$and As of the close of the US stock market on Thursday, the market fell 0.87% this week, closing at 39,935.07 points; during the same period, it fell 1.92%, closing at 5,399.22 points; however, it fell 3.08%, closing at 17,181.72 points. But it is during the hot earnings season, under the storm of "rotation" in the US stock market, there are still many individual stocks with excellent performance. Similarly, . GEO Group Inc. and corecivic, inc. (CXW.US) Stocks of prison companies may also rise, as strict immigration policies will benefit operators of correctional facilities.

$Smith & Wesson Brands (SWBI.US)$And.$Sturm-Ruger (RGR.US)$ Stocks of gun manufacturers also tend to rise with Republican victories. Cryptocurrency stocks have recently been seen as proxies for the "Trump trade" due to the former president's stance onBitcoin (BTC.CC)stocks worth watching includeCoinbase.N/A.$Marathon Digital(MARA.US)$N/A.$Riot Platforms (RIOT.US)$N/A.$CleanSpark(CLSK.US)$N/A.$MicroStrategy(MSTR.US)$AndCipher Mining (CIFR.US), as well as the Bitwise Crypto Industry Innovators ETF.

$Trump Media & Technology Group(DJT.US)$Stocks of the company may rise as the possibility of a Trump victory increases. The company is the parent company of the Truth Social platform, of which Trump owns a majority stake. Also likely to benefit are video sharing platforms$Rumble (RUM.US)$ , as of May, Trump's running mate Vance's (JD Vance) venture capital firm Narya holds shares in the platform.

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