Record stock market defies election uncertainty
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Illustration: Eniola Odetunde/Axios
It's finally time to bury the canard that "markets hate uncertainty."
State of play: The S&P 500 hit yet another record high on Monday, just 43 days out from what's still a coin-flip election.
- So did the Dow. The Nasdaq remains off its 2024 high from early July, but is still higher than at any point in any prior year. The Russell 2000 is up 25.5% over the past year, including 7% in the last six months.
The big picture: Markets doesn't have certainty over the next president, nor even what each candidate would do once in office.
- Kamala Harris has been agonizingly light on economic policy details, although may get a bit more granular during a speech tomorrow in Pennsylvania.
- Donald Trump has talked a ton about tax cuts and tariffs, but also has flip-flopped on everything from Bitcoin to TikTok to SALT deductions.
- And none of this even considers the uncertainty of congressional control.
Zoom in: The biggest forward-looking issue for dealmakers might be antitrust enforcement, and namely whether or not Lina Khan will continue to run the FTC.
- She was named to the post by Joe Biden and has been lauded by JD Vance, but neither Harris nor Trump has said anything publicly about her fate.
- But in the face of this crippling chanciness, new merger announcements are on the rise. Maybe because market uncertainty is a close cousin to market inefficiency, which is where returns are often made.
"Hold on," says rhetorical reader. "You're ignoring interest rates, and the certainty we now have after the recent Fed move."
- Sure. But we've had directional rate certainty for years. We knew when they were going up, and when they weren't being touched, and then spent most of 2024 awaiting cuts. It doesn't negate the broader policy perils.
- Maybe the better certainty argument would be that the economy performed pretty well under both Trump (pre-COVID) and Biden, regardless of their differences, although it's not an argument that gets made too often.
The bottom line: If anyone on Wall Street or Silicon Valley tells you they know what will happen next on economic policy, stop listening to that person. And if they bemoan "market uncertainty," remind them that they don't really care.
