A recent survey conducted by CNBC among top financial executives found that two-thirds of investors see the stock market performing “worse” under Democratic presidential candidate Joe Biden, compared to its performance under Republican President Donald Trump.
The CNBC survey was conducted earlier this month, on more than “100 chief investment officers, portfolio managers and CNBC contributors who manage money about where they stood on the upcoming year for stocks under a new administration.”
“Two-thirds of those polled said that they believe that the stock market will be worse during Biden’s four-year term than it was under Trump’s four-year term,” the publication wrote.
Just 33% said they believe stocks will be “better” under Biden than they have been under President Trump.
“Since Trump’s inauguration in January 2017, the S&P 500 has rallied more than 60% thanks in part to the president’s landmark corporate tax cut that led to a surge in profits and a record in share buybacks,” CNBC said.
It added that the Trump administration has also relaxed many regulations over the last four years, “creating a market-friendly environment for oil and other industries.”
“Many investors worry that a reversal of the tax cut, which Biden has pledged, could take a big bite out of earnings at a time when market valuations are sitting at multi year highs. Biden’s tax plan calls for raising capital gains rates for high earners,” CNBC said.
Despite a slower performance, two-thirds of respondents believe that the Dow Jones Industrial Average will “hit new highs” around this time next year, while 30% said they see the blue-chip index to “either stagnate or dip down” to as low as 25,000 points from where it currently sits at just above 30,000 points.
The Dow was closing in on 30,000 points in February before the coronavirus pandemic struck the US, after battering many parts of Asia and Europe — sending stocks to a tailspin and at its lowest point in March, dipping under the 18,600 points mark.
Meanwhile, only 5% of the respondents said the Dow will surpass the 40,000 mark by end 2021 and just 10% said they see the benchmark falling below 25,000 points. Another 18% believe the index will finish at 30,000 by the end of next year.
The economy has been a key strength of the Trump administration but with the ensuing Biden administration, top financial executives worry that the Democratic economic platform would be a little less friendly for Wall Street.
Biden’s tax plan, for example, departs significantly from President Trump’s 2017 tax cuts worth US$2.3 trillion. The Democratic presidential candidate, among others, is looking to increase corporate tax rate to 28% from the current 21%.
The former Obama VP also announced his plan to raise taxes by about US$4 trillion over the next decade — covering nearly all businesses and high-income American households, or those he described as “anyone earning more than US$400,000 annually.”
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Source: The Scoop