Democratic President-elect Joe Biden delivered a speech on Covid-19 at the Queen Theater in Wilmington, Delaware on October 23, 2020, and U.S. President Donald Trump spoke during a Make America Great Again rally in Gastonia, N.C., Jan. October in front of followers. 2020.
Wall Street investors broadly believe a Joe Biden presidency could mean lower stock market returns, according to a new CNBC poll.
As part of CNBC’s quarterly report, we surveyed dozens of investors, traders and strategists where they stood for stocks under new management in the coming year.
Two-thirds said Biden’s first four years for stocks will be worse than Trump’s tenure.
Since Trump opened in January 2017, the S&P 500 has risen more than 60%, in part due to the president’s landmark corporate tax cut that resulted in earnings spikes and a record share buybacks. The Trump administration has also relaxed many regulations over the past four years, creating a market-friendly environment for oil and other industries.
Many investors fear that reversing Biden’s pledged tax cut at a time when market valuations are at multi-year highs could have a big impact on earnings. Biden’s tax plan is to increase capital gains rates for high earners.
While investors believe Biden’s policies could create headwinds for the overall market, some sectors would outperform others. According to the survey, consumer discretionary, industrial and financial companies will perform best under a Biden administration.
Utilities, consumer staples and energy may have a hard time outperforming, the survey said.
Dow to hit 35,000?
Still, Wall Street is optimistic that the Dow Jones Industrial Average will hit new highs next year.
Two-thirds of respondents said the blue-chip benchmark is expected to close at 35,000 in 2021, up around 16% from Thursday’s close of trading of 30,199.87. Five percent said the ad could climb to 40,000 by the end of next year.
Ten percent said the Dow will fall to 25,000, while 18 percent said it will fall to 30,000.
The 30-share Dow has eliminated pandemic-triggered losses and hit new highs before the end of the year, but it lagged significantly behind the Nasdaq Composite Tech benchmark, which is up more than 42% this year.
These investors and strategists were also asked which new investments – options contracts, Bitcoin or special purpose vehicles – their customers will use in 2021. The majority, 58%, said SPACs, 33% said Bitcoin, and 9% said options.
There was SPAC madness on Wall Street that year with funds raised through blank check deals totaling $ 70 billion. This is a remarkable five-fold increase over the previous year. The staggering growth was due to the increased market volatility caused by the pandemic. The involvement of high profile investors, including hedge fund billionaire Bill Ackman, also brought more hype to these alternative vehicles.
Bitcoin became the surprise winner of 2020, leading every major asset class, from stocks to bonds to commodities. The world’s largest cryptocurrency broke over $ 20,000 for the first time this month, bringing its 2020 progress to over 180%.
Many attributed the sensational rally to major industry involvement, including Fidelity Investments, Square and PayPal. The interest of well-known investors like Paul Tudor Jones and Stanley Druckermiller also contributed to the increase in digital coin.
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