A Wall Street chief strategist says a Biden blue wave could spur a 5% drop in the S&P 500 because of uncertainty over some Democrat policies

Robyn Beck/AFP via Getty ImagesJoe Biden and Kamala Harris
  • The S&P 500 and the Dow Jones could fall 5% with a decisive victory by Joe Biden, in which the Democrats win the election, and control both chambers of the Congress, a chief market strategist told Business Insider.
  • TickerTocker’s Steve Kalayjian, said: “The S&P 500 is fine now, but if Biden wins, there will be a sell-off. If Trump wins, you’ll see the Dow and S&P easily climb to new highs,” Kalayjian said. “I see a decline of 5% or more.”
  • Kalayjian said uncertainty over the Democrats plans including their climate policies and raising corporate taxes is creating uncertainty for markets.
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The S&P 500 and Dow Jones could lose 5% if the Democrats win the White House and both chambers of Congress at the election next month, because of a lack of clarity over some of the party’s key policies, one Wall Street strategist said.

Steve Kalayjian, chief market strategist and co-founder of trading platform Ticker Tocker said a “blue wave” victory by the Democrats could ignite a sell-off in the S&P 500. “

I don’t think the Democrats are being forthright with the policies they are prescribing with the Green New Deal, Supreme Court, and new tax policy both corporate and individual,” Kalayjian said.

“The S&P 500 is fine now, but if Biden wins, there will be a sell-off. If Trump wins, you’ll see the Dow and S&P easily climb to new highs,” Kalayjian added. “I see a decline of 5% or more.”

Democratic opponent Joe Biden has long advocated raising corporate taxes from 21% to 28% if he wins, which analysts believe could hamper stock market returns and companies’ earnings.

Democrats have also expressed support for policies that are aimed at combating climate change, such as pledging to re-sign the Paris Agreement, which US President Donald Trump’s administration abandoned in 2017.

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The S&P 500 has risen around 60% since touching multiyear lows in March, mainly helped mainly by a boom in technology stocks and low interest rates. But the index has lost some ground since hitting a record high in early September, as Democrats and Republicans struggle to reach an agreement on more government support of the economy.

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“A lot of people are worried because they don’t have the details of the Democrats policies. So, the potential blue wave causes uncertainty and will be negative for the markets for a long time,” Kalayjian added.

Biden’s lead over Trump in the polls has caused a number of Wall Street’s biggest banks to increasingly expect a blue wave at the election on November 3.

Credit Suisse senior investment strategist Suresh Tania told CNBC earlier this month a Biden win could spur a “knee-jerk” reaction in the form of a 5% pullback given the nominee’s stance on corporate taxes.

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