Stock Market Today: Dow futures jump 500 points as investors pencil in Trump win
The conventional market wisdom that a win by former President Donald Trump would be a positive for stocks has two things going against it, Bob Elliott, the co-founder of ETF provider Unlimited Funds and a former Bridgewater Associates executive, told MarketWatch Tuesday night.
First, stocks have already seen a strong rally on expectations of a Trump win, he said in a phone interview. Second, the real question is whether focusing solely on the possibility of corporate tax cuts and their benefit to stocks makes sense when looking comprehensively at a policy mix, including tariffs, that is effectively an inflationary middle-class tax cut “that would not be a particularly positive set of policies toward the equity markets.”
Elliott sees almost the exact opposite of the setup in 2016, when a Trump win was expected to result in a stock-market selloff. Instead, stocks initially dipped on election night, then soared after the outcome became clear.
The substantial deficits projected in the event of a Trump victory or a Republican sweep could start to spark a move away from the dollar and toward other assets like gold.
“Yields rising and the dollar falling would be a pretty notable indication that markets are pricing in a set of imprudent Trump policies,” he said.