The investor's guide to watching Trump-Harris election results
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A largely subdued market Tuesday gave off an air of calmness while the rest the country stresses about the unfolding election — but don't be fooled.
Why it matters: The outcome could have a direct impact on the economy, stock market, currencies, crypto, regulations and taxes.
Here's our guide to what investors should be watching Tuesday night:
The VIX: Keep a close eye on the Volatility Index, which serves as something of a nervousness gauge for stock investors.
- It ended Monday around 22.0 — lower than the Election Eve average of 25.5 since 1992, according to DataTrek Research.
- But if the VIX spikes after the results come in, you'll know the market is expecting big swings in the S&P 500 over the next month. Futures contracts suggest investors are bracing for a short surge.
Crypto: Watch bitcoin to see whether the Trump trade is unraveling or paying off.
- If Trump is in trouble, crypto could take a tumble — but a win could inspire more confidence in its future.
Trump Media & Technology Group: The Truth Social owner's shares have become a meme stock for investors who want to bet on a Trump victory.
- DJT closed down 1% today after taking a dive late Tuesday afternoon, but its ultimate fate could hinge on Trump — its biggest stockholder — returning to the White House. (It's not entirely clear why.)
The prediction markets: Trump continued to lead in the prediction markets as of 4:30pm Tuesday at Polymarket (61%), Kalshi (57%) and PredictIt (54%), even after analysts like Nate Silver said it's a 50-50 coin flip.
- Expect the prediction markets to swing sharply as soon as votes are being tallied as investors unwind previous bets and make new ones.
- "While a nearly 20-point gap in the betting markets looks wide, it's a smaller lead than it seems and indicates only a modestly better than coin-flip chance in favor of the former President," Bespoke Investment Group analysts wrote today.
The possibility of gridlock: If control of Congress and the White House is split between Republicans and Democrats, that'll mean gridlock — which investors generally like.
- "Our base case is that there will be a split Congress, which will limit the ability to institute significant enough changes to fiscal policies that a president would be able to push through which would materially alter market valuations," writes Dave Sekera, chief U.S. market strategist at Morningstar.
If there's a clear winner, what does the victory say about their agenda?
- Investors will be especially keen for clues on the future of Lina Khan's tenure at the Federal Trade Commission, the prospect of a heightened trade war with China, energy policies such as EV incentives and, as always, comments on tax rates.
Advice for the road: "Don't let any dire headlines scare you into any short-term actions," Sekera writes.
- "Make changes to your portfolio when warranted by the situation and outlook but based only on informed analysis. Lastly, don't react to any scaremongering. Take a breath and think about what investment decisions you are considering before doing it."
