Here's What the Harris-Trump Debate Means for US Stocks

With the US presidential election just two months away, all eyes are on the pivotal debate between Vice President Kamala Harris and former President Donald Trump, set for Tuesday, Sept. 10 at 9 p.m. For investors strategizing around the "Trump trade" or the "Harris trade," the market's forward-looking reaction to their governing policies is critical. The election outcome will shape expectations of their administration, leading to early capital allocation in sectors poised to benefit.

For Wall Street, the faceoff could heighten volatility amid existing uncertainties around the labor market, interest rates, and geopolitics. Here's what investors will be following in the debate — and beyond.

In the lead-up to the presidential election, several polls suggest a tight race. A new USA TODAY/Suffolk Poll gives Harris a 48%-43% advantage, within the poll's margin of error. Another poll by 538/ABC News shows Harris leading Trump 47%-44% this week.

There's also a new betting favorite in the race. As of Monday, former President Donald Trump retook a narrow lead over Vice President Kamala Harris for the first time since mid-August, according to Bet365. Trump maintains a slight edge in other betting markets as well, including Betfair Exchange and Polymarket, where his odds stood at 51% as of 3 p.m. ET Sunday.

Renowned historian Allan Lichtman has confidently predicted Kamala Harris as the winner of the upcoming US presidential election, bypassing traditional polling methods and media tactics. Speaking from his Bethesda home, Lichtman shared his forecast based on his unique "13 keys" method, which has accurately predicted all but one election since 1984, with the one exception of 2000 victory of George W. Bush.

A Harris victory is expected to boost several industries, particularly renewable energy, electric vehicles, and utilities. Avoiding a trade war with China, in contrast to Trump's aggressive rhetoric, is a significant aspect of the Harris trade.

Goldman Sachs forecasts a "very slight boost" to GDP between 2025 and 2026 if Harris wins and Democrats control both the House and Senate. The expanded middle-income tax credit is expected to counterbalance the impact of higher corporate tax rates on investment.

Harris's entry into the presidential race to replace current President Joe Biden boosted the odds for a Democratic victory in the race. Jefferies strategists say that if she wins the presidential election, the focus will be on taxes, regulations, industry policy, trade, and energy transition.

Goldman Sachs also projects that a victory for former President Donald Trump, coupled with either a divided government or Republican control of both houses of Congress, could lead to a 0.5 percentage point drag on GDP in the latter half of 2025. This forecast hinges on the assumption that Trump's proposed higher tariffs and stricter immigration policies would counterbalance any positive effects from government stimulus measures, such as reduced corporate taxes.

Interestingly, similar predictions during Trump’s first term did not materialize as expected. Despite trade wars, the economy saw steady growth, historically low unemployment, and stable inflation rates.

Jefferies analysts also cited 10 possible policies that Trump might implement if he wins the next election and how these could affect stocks. Their analysis was based on Trump's Agenda 47 proposals, and the 220 executive orders from his first term, along with insights from Jefferies' policy experts. The analysts also reviewed Harris's recent statements and the 2024 Democratic Platform as they examined the impact on stocks.

As the presidential debate approaches, investors will be closely monitoring the candidates' positions on key economic issues. The market's reaction to the debate and subsequent polling data will provide further insights into which sectors may benefit or face challenges based on the election outcome. Regardless of the winner, the election is set to be a significant market-moving event, shaping investment strategies and capital flows in the months ahead.