Analysts Split on Whether Biden Win Would Help or Hurt Stocks

(Bloomberg) -- Joe Biden’s broad victory in this past weekend’s South Carolina Democratic primary is pumping new energy into his campaign. Some analysts see that as a good thing for stocks, which might gain if investors cheer a candidate with a relatively moderate agenda.

Others, however, are sticking to the view that Bernie Sanders would be an easier challenger for President Donald Trump to beat, which would be the outcome markets would ultimately prefer.

On Monday, stocks rallied after last week’s punishing coronavirus-triggered selloff, boosted by rising investor confidence that central banks will take action. The S&P 500 gained as much as 2.9%, the most since Jan. 4.

Here’s a sample of some of the latest commentary:

KBW, Brian Gardner

“Markets could get some support from the view that Bernie Sanders is no longer a sure thing to win the Democratic nomination,” Gardner wrote in a note.

At the same time, he warned that early voting in some Super Tuesday states, like California and Texas, could cap any bounce Biden might have gotten from South Carolina. KBW expects Biden will capture several southern states on Tuesday while Sanders will probably win California, Massachusetts, and a few others.

Gardner sees Texas as key; if Sanders can win there, he “will be in good shape to win the nomination even if he lacks a clear majority of delegates before the Democratic convention.”

Vital Knowledge, Adam Crisafulli

A good performance from Sanders on Super Tuesday may be among things that would “help to calm market sentiment,” Crisafulli wrote. That’s as markets would likely “much prefer a second Trump term over any of the Democrats,” while “Sanders represents the ‘easiest’ opponent for Trump.”

AGF Investments, Greg Valliere

A surge for Sanders this week “would be market friendly, a clear plus for Trump,” Valliere wrote. “The coronavirus panic adds an element of uncertainty to the November election, but if the economy is pumped up on stimulus by autumn, and if Trump relies on scientists like Dr. Anthony Fauci, a second term for this controversial president still looks like a good bet if he faces Sanders, and a fair bet if Biden somehow wins the nomination.”

Veda Partners, Henrietta Treyz

“While we don’t expect Sanders to drop out of the race, we do expect the narrative to continue to shift out of his favor in the coming days as a more representative basket of the population gets a chance to vote in the 2020 Democratic primaries,” Treyz wrote.

On Tuesday, Veda will be “closely monitoring youth voter turnout and voter preference of black, Latino and suburban white female voters as the final data rolls in.” Veda sees a “very high likelihood” Sanders will declare himself the winner, even if he doesn’t win the majority of the delegates.

(Disclaimer: Michael Bloomberg is seeking the Democratic presidential nomination. He is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lisa Wolfson

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