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How the First 2020 Presidential Debate Might Impact the Stock Market

  • A strong debate performance from either President Donald Trump or Democratic challenger Joe Biden could have an impact on market performance
  • Effect may be focused on individual sectors rather than the market as a whole
  • Historically, presidential debate have done little to change the direction of the market

When President Donald Trump and Democratic challenger Joe Biden face off in the first of three televised debates tonight, investors will be watching. How the candidate perform could have a noticeable effect on the stock market on Wednesday.

Analysts suggest that investors are more supportive of Trump’s policies than Biden’s, which include a higher corporate tax rate and raising capital gains taxes, as well as an expectation of more regulations. As such, a strong Biden performance could see a corresponding dip in the market.

However, presidential debates have historically had a minimal effect on the markets, and the impact of Tuesday’s debate could be seen more in individual sectors. For example, a strong Trump performance could see a boost in areas such as energy stocks and student loan lenders, while a perceived Biden win could push up renewable energy, tech, and infrastructure stocks.

Investors are likely to weigh candidates’ responses to questions on China relations and tax policy, and the impact on the market might not be apparent until the results of post-debate polls are released. Other issues, such as fears of a contested election or uncertainty over new COVID-19 relief, could be greater drivers in market trends.

Analysts see this year’s presidential debates as potentially having an amplified effect on the market, since the COVID-19 pandemic has limited campaign activities and the debate gives the candidates an opportunity to emphasize their goals and priorities before a wider audience. Two other debates are scheduled for Oct. 15 and 22.

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