Sanders factor has impact on trading
Certain sectors drop after his Nevada win
NEW YORK — As U.S. stocks tumbled on Monday, hit by mounting coronavirus fears, analysts also flagged the possibility that investors haven’t been taking Bernie Sanders seriously enough, after the Vermont senator’s surprisingly broad support in the Nevada caucus Saturday.
Sectors with exposure to the progressive candidate, including managed care companies and the biggest banks, underperformed in early trading.
Centene Corp. and UnitedHealth
Group ended last week lower and were the biggest decliners in health care on Monday, with both sinking more than 7%.
The KBW Bank Index shed as much as 3.5%, the most since August, and fell to the lowest since late October, with Bank of America Corp. and Citigroup Inc. briefly dropping more than 4%.
Here’s a sample of the latest commentary:
At Cowen, Jaret Seiberg wrote, “It appears to us that Sen. Bernie Sanders is not just solidifying his position but also could be a bigger threat to President Trump in the general election than the market appreciates,” Mr. Seiberg wrote in a note. “That would represent a
major threat to financials and housing as Sanders has the most punitive agenda for these sectors given his plans for taxes and regulation.”
At Beacon Policy Advisors, “In a politically polarized country where President Trump still remains underwater in his approval, the market is severely underestimating the chances of Sanders winning the presidency, and thus his potential impact on numerous companies and industries.”
At Vital Knowledge, Adam Crisafulli wrote, “Sanders is very likely to become the Democratic nominee and he’s very likely going to lose in November.” However, he said,
“Investors should be altering their odds modestly as Bernie’s Nevada performance suggests he’ll be a more potent candidate than previously thought.”
Mr. Sanders, he added, “appeals to many of the same disaffected groups that helped push Trump over the edge in certain critical states, suggesting Sanders may be a more competitive Electoral College candidate than Hillary was.”
And, Mr. Crisafulli wrote, Mr. Trump becomes “eminently beatable if the stock market and/or economy falters in the months preceding the election and this could become a self-fulfilling prophecy (as Bernie’s prospects improve, the fear of a Sanders presidency will weigh on economic activity and the stock market, helping to further fuel his odds).”
Even so, Mr. Crisafulli said, “The economy is healthy, and this will matter more than anything.” Investors should keep in mind, he said, that Trump has a “major economic stimulus card in his back pocket in the form of existing tariffs — he could simply lift all the China trade restrictions should the market and/or economy falter further.”
At AGF Investments, Greg Valliere wrote, “It would take quite a wild card to defeat Trump, but there’s a serious one that is impossible to handicap.” That’s the coronavirus, he said, as the “U.S. is not invulnerable.”