20 strategists predict the U.S. presidential election — and how stocks will react

A majority of stock market strategists polled by CNBC expect Democratic candidate Joe Biden to win the U.S. presidential race — but they’re significantly split on what the election would mean for stocks.

Fourteen of 20 strategists surveyed by CNBC picked a Biden victory over Donald Trump. Half of the 20 strategists expect the S&P 500 to decline in the first month following election day — though not all those who foresee a stock market slide picked Biden. Five of the 20 expect a rally, four predicted a range-bound market, and one declined to answer.

Eight said they expect a decline of 5% for the S&P 500 in the first month after the election — with three of that group picking Biden, two picking Trump, and two predicting a contested election. Two strategists forecast a 10% decline for the S&P 500 after the election — one of them picked Biden, the other Trump.

CNBC offered the strategists anonymity in exchange for their views; 19 of the 20 respondents were based in the United States, with one based in the Asia-Pacific region. The email-based survey took place last week.

Some attributed a negative market reaction to Biden’s proposed tax policies.

“If Biden wins and the Democrats take the Senate, the first major move in 2021 will be lower as the taxation agenda takes shape,” said one analyst.

Another said that the market reaction will depend on how the Senate races flesh out: “If Democrats win the Senate with Biden winning the (White House), then a market rally will probably be harder to come by than if Biden wins and the Senate stays Republican, as he will less likely be able to pursue his tax agenda unchecked under this scenario.”

Only three of the 20 survey participants expect a clear, uncontested Trump victory.

Respondents clearly were concerned about the possibility of a contested election. When asked about the implications such a conflict would pose for markets, 11 analysts predicted a decline of 5-10%, and five others said the selloff could be worse than 10% on the S&P benchmark.

Analysts believe that the anti-China sentiment in the United States has bipartisan support, but they said the handling of the relationship would be different under the two candidates.

President Trump, they said, would probably intensify his anti-China stance. However, the pain would be felt more intensely within the technology sector than on the broader trade front.

20 strategists predict the U.S. presidential election — and how stocks will react, CNBC, Aug 24