Worried About A Trump Or Harris Election Win? Here's How The Stock Market Could React, What To Do Now

As the U.S. presidential election approaches, investors are wondering how the stock market will react to a potential win by former President Donald Trump or Vice President Kamala Harris. While the outcome is uncertain, historical data and expert opinions can provide insights into how the market might behave and help investors make informed decisions.


The stock market has historically risen under both Democratic and Republican administrations. Since 1929, the S&P 500 has averaged annual returns of 10.4% under Democratic presidents and 6.9% under Republicans (Dimensional Fund Advisors). Only three presidents have experienced negative returns during their terms. Similarly, bond markets have performed well, with only President Biden's term on track for negative returns since 1977.


However, the market's reaction to election outcomes can vary in the short term. A contested election or a change in the White House can lead to increased volatility. In the case of a Trump win, investors may be concerned about his proposed tariffs, which could spark global trade animus and cause more inflation. UBS projects that U.S. stocks could fall roughly 10% in a "universal tariff scenario." On the other hand, a Harris victory could lead to a hike in corporate taxes and stricter regulations, which could limit corporate profits and slow stock market gains.

Despite these potential impacts, history shows that the stock market tends to rise regardless of which party wins the White House. Investors should focus on fundamentals and avoid making decisions based on political outcomes. Instead, they should prioritize earnings as a key driver of stock performance, especially in sectors like Big Tech and insurance.


In the energy and technology sectors, a Trump presidency could boost oil stocks like Chevron and ExxonMobil, while a Harris administration could benefit solar and electric vehicle stocks. However, the overall market performance may be more influenced by macroeconomic factors and geopolitical tensions, such as fluctuations in oil prices due to Middle Eastern conflicts or China's economic weaknesses.

To manage risk during this period of uncertainty, investors should maintain a balanced approach, considering both macroeconomic factors and company-specific fundamentals. They should stay flexible and adapt to changing market conditions, while being prepared for geopolitical tensions and economic uncertainties.

In conclusion, the stock market's reaction to a Trump or Harris election win is uncertain, but historical data suggests that the market tends to rise regardless of the controlling party. Investors should focus on fundamentals, avoid making decisions based on political outcomes, and maintain a balanced approach to manage risk during this period of uncertainty. By doing so, they can position themselves to take advantage of opportunities that may arise in the market, regardless of the election outcome.