RDLESS of the results of tomorrow’s US presidential election, the next four years will be a tough act to follow from Wall Street’s standpoint.
The benchmark Standard & Poor’s 500 Index has rallied 66 per cent since President Barack Obama took office – one of the most impressive runs ever for stocks under a single president. Admittedly, the timing of his inauguration – just before the market hit a nadir in March 2009 – is part of the reason.
The national polls show a tight race between Obama and his challenger, Republican candidate Mitt Romney, but leaning toward a win by the president.
“The market might like the fact of an Obama win since it would mean less uncertainty,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, in Cincinnati.
Strategists have said the market’s pattern of late also suggests status quo – an Obama win. A “Romney rally” is a 1-in-3 possibility, taken betting site InTrade’s odds of an Obama win at about 67 per cent right now. Other prognosticators put his chances of re-election even higher.
The most recent Reuters/Ipsos tracking poll shows both candidates garnering 46 per cent of the vote – but polling averages show Obama with small but critical leads in swing states Ohio, Virginia and Iowa.
There’s a conventional line that says a victory by longtime businessman Romney would be better for the equity market, given his predilection for fewer regulations and lower corporate tax rates. Still, any move in the market, no matter the outcome, is likely to be limited.