Biden’s Effect on the Markets

Joe Biden is the president-elect, according to the AP, a divided government means any proposal will meet significant roadblocks. (Photo courtesy of U.S. Embassy Jerusalem)

By Fiona Liu
Money and Investing Writer

President-elect Joe Biden won the presidential race, according to the Associated Press. He is the first president since George W. Bush to enter the house without power over the house or senate.

This is a scenario that works in favor of Wall Street. Republicans in the Senate have little incentive to enact a larger stimulus package that the Democrats want. Republicans will likely block tax increases, big spending programs, and other regulations.

Stocks jumped again Thursday. It is the first time since 1982 that the Dow and S& P 500 rose at least 1% in four straight sessions, giving the stock indices their biggest return since April.

There is relief across investment firms as tougher tax policy and tougher corporate reform seem to be off the table. The Biden administration’s more progressive and high spending proposals are unlikely to get passed with a divided legislature.

Biden’s economic plan includes substantial corporate taxes and capital gains taxes, both of which are disruptive to the market.

For big tech companies like Google, Apple, Amazon, and Facebook either outcome would work in their favor. With the Republicans likely to control the Senate the chances of major antitrust law are now off the table in the eye of investors. That would have caused a ripple effect across the sector, posing a huge threat.

Biden’s Medicare plan would bar Medicare from negotiating a lower price with drug corporations, a substantial impact on the healthcare sector. This would have led to lower profits for pharmaceutical companies and lower share prices.

Another area to keep an eye on is infrastructure and investing in energy and sustainability. Tesla, for example, would benefit from Biden’s EV friendly policies.

These sectors in Wall Street are unlikely to be significantly disrupted under the current government’s makeup. While Biden is the President-elect, the legislative branch is firmly in the hands of the Republican party.


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