Investors are scrambling to shift their positions after the high-profile debate between Republican Donald Trump and Democrat Kamala Harris, with betting markets swinging in favor of Harris following the event.
Shares of Trump Media & Technology Group, the company that owns Truth Social, fell 13% Wednesday afternoon, while other so-called Trump trades, such as bitcoin and cryptocurrency stocks, fell. Solar stocks, which appeared to benefit from Harris’s victory, rose, while health care stocks fell.
In a heated debate late Tuesday, Trump and Harris clashed on everything from the economy to immigration, as each looked for a moment that could change the course of the campaign in a tight race.
Their exchange left investors with little new detail on U.S. issues that could shake markets, including tariffs, taxes and regulations. But online prediction markets showed Harris as the more likely bet to win in November. Harris’s odds improved to 55 cents from 53 cents before the debate on PredictIt’s 2024 presidential market, while Trump’s odds fell to 47 cents from 52 cents.
“There’s a general view that Harris won the debate,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore. “It’s not a clear win for Harris, but Trump’s odds of winning have gone down a bit.
While the presidential election is a focus for investors, political concerns have recently merged with more direct market factors, including concerns about a weakening U.S. economy and uncertainty about how far the Federal Reserve will cut interest rates.
The S&P 500 posted its biggest weekly loss since March 2023 last week after a second straight weak jobs report, but the index is still up about 15% this year.
Still, some investors believe even small changes in perception of the candidates could be significant in a contest where tens of thousands of votes could be at stake in a handful of states. According to an average of polls compiled by The New York Times, the candidates are virtually tied in seven key states that could decide the election.
“The US presidential debates achieved their goal by giving one of the candidates a decisive edge in an exceptionally tight race,” said Charu Chanana, Saxo’s head of FX strategy and global market strategist. “Cryptocurrencies and energy stocks could face headwinds as market sentiment adjusts to the changing political dynamics.”
Trump has put himself forward as a cryptocurrency-supporting candidate.
The impact of the discussion
Investors pointed to several markets where the controversy had an impact.
Investors slammed shares of Trump Media & Technology Group, a popular retail trader and a concern that the former president could win the 2024 election. The stock fell as much as 18% to $15.30, its lowest since its IPO. Bitcoin fell nearly 4% before being nearly flat on the day, while shares of some crypto-focused companies, including crypto miner Riot Platforms, also fell.
Shares of correctional facility operators that stand to benefit from tougher immigration policies, including GEO Group and CoreCivic, also fell.
At the same time, shares of U.S.-listed solar companies that appeared to benefit from Harris’s victory rose. The Invesco Solar ETF, which has fallen about 25% this year, rose 5% on Wednesday.
Health insurance stocks, including Humana and CVS Health, also fell Wednesday, as some analysts said Harris’ push to lower drug prices could weigh on the sector.
Taxes and Duties
Trump has promised lower corporate taxes and a tougher stance on trade and tariffs. He has also said the strong dollar is hurting the U.S., but some analysts believe his policies could fuel inflation and ultimately boost the currency.
Harris last month outlined a plan to raise the corporate tax rate from 21% to 28%, a proposal that some on Wall Street fear could hurt corporate profits.
Steve Chiavarone, senior portfolio manager at Federated Hermes, said a Harris presidency, which is unlikely to widen the budget deficit due to increased spending, could help support Treasury prices while also boosting large-cap growth and technology stocks.
He said Trump’s U.S.-centric policies, including tax cuts and tariffs, could boost small-cap and cyclical companies while hurting bonds.
On Tuesday night, Harris attacked Trump’s plan to impose high tariffs on foreign goods, likening the proposal to a sales tax on the middle class, and touted her plan to provide tax breaks for families and small businesses.
