Investors need clarity from Super Tuesday

Wall Street could see a lift as this year’s political field narrows

- Adam Shell

The political brawl for the White House has weighed on stocks in 2016, amid high levels of uncertaint­y over which candidate will win their party’s nomination.

But there’s a chance Wall Street might get some clarity after Super Tuesday if clear frontrunne­rs emerge from the remaining ranks of Republican and Democratic hopefuls.

On the Democratic side, strong results from Hillary Clinton in the 11 states that vote Tuesday could all but cement Clinton’s front-runner status and turn upstart Bernie Sanders, the U.S. senator from Vermont, into a long shot.

And if Donald Trump can pull further away from challenger­s, such as Texas Sen. Ted Cruz and Florida Sen. Marco Rubio, the real estate investor and reality TV star can also move closer to the Republican nomination.

In short, if the path to party supremacy becomes clearer when investors wake up to start trading Wednesday, and uncertaint­y lessens, markets could benefit, David Kotok, chief investment officer at Cumberland Advisors, told clients in a recent note titled, “Stocks and Politics.”

“A narrowing of the presidenti­al field could reduce the political uncertaint­y and provide a lift for stocks,” Kotok wrote. “The political outcome will certainly be clarified, since the process is driven by a fixed calendar.”

“We should know more this week after Super Tuesday,” Don Rismiller of Strategas Research Partners, noted in an email to USA TODAY. Of course, presidenti­al politics can’t be blamed for all the stock market’s woes this year, as equities have been facing many headwinds, such as slowing global growth, weak corporate earnings growth and angst over U.S. interest rate policy.

Still, the circus-like presidenti­al party nomination process early this year has played a role in the stock market’s troubles, as most candidates have focused on America’s shortcomin­gs.

History shows that market volatility increases during election years, as investors fret about the potential impact a shift in policies could have on the economy and markets depending on which candidate is leading in the polls.

Newspapers in English

Newspapers from United States