Two-thirds of the nation’s top investors believe that under Democrat Joe Biden, the stock market will fair “worse” than it did under President Donald Trump.
The CNBC survey, carried out earlier this month, polled 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 stated that they believe the stock market will take a turn for the worse under a Biden administration. President Trump ushered record highs for the US stock market during his tenure in the Oval Office.
Since Trump’s inauguration in January 2017, the S&P 500 has rallied more than 60 per cent thanks in part to the president’s landmark corporate tax cut that led to a surge in profits and a record in share buybacks. 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 multiyear highs. Biden’s tax plan calls for raising capital gains rates for high earners.
Two-thirds of respondents said that they believe that the Dow Jones Industrial Average will reach new heights in 2021. Approximately 30 per cent of respondents stated that they expect the blue-chip benchmark to stagnate or sink to as low as 25,000 points. It currently stands at the above 30,000 mark. The DJIA was closing in on 30,000 points in February prior to the pandemic. At its lowest, the DJIA dropped below 18,600 points in March but has since returned to its former highs.
“The pandemic crisis created the biggest divot in the economy that we’ve ever had in the postwar era,” Chief market strategist at the Leuthold Group, Jim Paulsen, told CNBC in November. “The output gap – the difference between where actual GDP is from what it potentially could be if you had full employed all the resources at normal productivity – it fell to almost 11 per cent at its largest. It has now improved a little bit as the third-quarter growth rate improved, but it’s still at about 8 per cent which is larger than almost any time in postwar history.”
The United Nations Conference on Trade and Development reported that the global economy will have contracted by “a staggering 4.3 per cent in 2020.” The organization warned that the contraction “could send an additional 130 million people into extreme poverty.”
President Donald Trump has attempted to aid struggling Americans by pushing for $2,000 coronavirus stimulus checks. The effort failed to meet expectations after he was forced to sign a stimulus package that offered $600 stimulus checks.