Tomorrow's presidential debate between the Democratic and Republican candidates is set to be a major event. While it won't be an over-the-top spectacle, it's unlikely to lack intensity.
Both sides are expected to exchange criticisms over issues like economic performance, broken promises, and policy failures – each holding the other accountable for various challenges. The debate is shaping up to be a verbal MMA match.
Polls indicate a tight race, and the debate could tip the balance to one side or the other. Trump enters with a slight edge, partly thanks to his solid public speaking skills. Harris, on the other hand, might aim to unsettle Trump emotionally – a tactic that, if successful, could echo the dynamics of 2020, when initial expectations of Trump’s victory were overturned by the final outcome.
As for who would be better for the S&P 500 or the Nasdaq, both sides have the best plan for the economy, cautioning that a win by the opposition could lead to economic instability. Nothing new here...
In reality, the markets do their own thing, no matter who's in the White House. What drives them are broader economic conditions and the global geopolitical scene, and neither looks too good.
Starting with the first, the drop in job openings in the United States to 7.673 million – the lowest level since January 2021 – has rekindled fears of a possible “hard landing.”
These concerns caused the Nasdaq to suffer its biggest weekly drop since January 2022, with a decline of more than 5% in the first week of September. The S&P 500 and Dow Jones also suffered significant losses.
As for the second factor influencing markets, although fears of a major conflict in the Middle East have eased somewhat, they have not entirely disappeared and still represent a potential threat.
If Trump secures a second term, it could significantly shift the current geopolitical landscape, with a stronger focus on China – something he’s been quite open about.
Harris has been more reserved in this area, but some of her economic policies might still raise concerns for the markets.
For instance, a proposal to raise the corporate tax rate to 28% could cut corporate profits by 5%. This, in turn, might reduce the volume of future buybacks, potentially impacting the S&P 500.