Trump frown photo

Donald Trump’s political career will likely end on Jan. 20 — barring an improbable 2024 presidential run.

“If [Joe Biden] gets in, you will have a depression the likes of which you’ve never seen,” President Donald Trump said in the second presidential debate on Oct. 23. “Your 401(k)s will go to hell, and it’ll be a very, very sad day for this country.”

The Democratic presidential nominee who’s since taken the White House, according to the Associated Press and several other news outlets, would “kill” a successful economy, Trump promised. He claimed increased taxes and regulations would erase the 57.4% gain the S&P 500 has enjoyed since Nov. 9, 2016, when Trump became president-elect, through Tuesday. 

Wall Street appears to strongly disagree. 

Stocks took off last week, even as it became clear Trump was losing his lead. That’s in large part because it also became clear that Republicans would likely keep control of the Senate, meaning there’d likely be no “Blue Wave” by Democrats and subsequent tax hikes.

Investors flocked to risk assets — which sold off to close October — before the election, as the S&P 500 climbed 3.0%, the Dow Jones Industrial Average climbed 3.7% and the tech-focused Nasdaq Composite rose 2.3% on Monday and Tuesday. After Election Day, those averages jumped 4.2%, 3.1% and 6.6%, respectively, for weekly gains of 7.3%, 6.9% and 9.0%.

Last week’s stock market performance was the best in an election week since 1932, according to Barron’s. The reduced likelihood of a contested election with weeks of uncertainty after Nov. 3 also factored into the surge higher, as such an outcome would force a flight from equities.

That the markets shrugged off an impending Trump loss must be a gut punch for a president that’s celebrated and prided himself on above-average returns for equities since he took office.

What’s behind the move?

After substantial polling leads for Biden heading into the presidential election, it’s safe to say investors were pricing in a Blue Wave where Biden took the White House and Democrats took the Senate and kept control of the House of Representatives.

Such an outcome would surely lead to the corporate tax rate rising to 28% from 21%, where it’s been since the Republican-led Tax Cuts and Jobs Act of 2017, though still lower than the 35% clip it had been at since 1993. The move would likely raise the effective tax rate by 8% and slice corporate profits by 10%, according to Zion Research Group, which would spark stock selling.

Antitrust action against Alphabet — Google’s parent company — is underway, and fellow tech giants Amazon, Apple and Facebook could follow suit, though the pressure may not be as intense under a divided government. A reduced headwind against those high-fliers is bullish.

But it would’ve also led to a larger stimulus package that Federal Reserve Chairman Jerome Powell has repeatedly pleaded for, along with investors, and Congress balked at. While many Americans have successfully adapted amid the pandemic as the unemployment rate slid down to 6.9%, millions more are out of work and in desperate need of government aid.

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A hefty stimulus package, which Democrats want, would disproportionately help businesses in economically sensitive sectors like the industrials sector, as airlines would get much-needed assistance. Small market capitalization companies tracked by the Russell 2000 index would also take off after months of lagging behind their mid- and large-cap counterparts.

The world is waiting to hear who the next president is, as are JMU students, faculty, staff and others in the Harrisonburg community. The Madison Business Review spoke with JMU professors to add historical context to the roles politicians and the media are playing in this monumental moment in U.S history.

As investors prepared for a Blue Wave and a generous stimulus package on Monday and Tuesday, the industrials sector marched 5.7% higher while the Russell 2000 advanced 4.9%, with both outpacing the three major averages. 

But industrials and small-cap stocks lagged technology, consumer discretionary companies and the broader market later in the week, which may continue with a divided Congress, assuming the stimulus package comes in lighter than hoped for by the left. Large-cap companies, including the technology giants that led the market off its March lows, won’t be near as affected.

What’s next for Wall Street?

While an ununified America is undesirable, a divided Congress is far from the worst thing for the country, not to mention investors. Stocks generally rise regardless of who’s president, and gains under a split Congress are right in line with those in a unified Congress, as noted in last week’s October market recap.

Both Democrats and Republicans can find some solace in the election results. For the former, Trump’s political career will likely end on Jan. 20 — barring an improbable 2024 run. Biden’s win was narrower than expected, but the outcome was the same, and his party kept the House of Representatives, though it lost some seats and underperformed in Congressional races.

For Republicans, Trump’s loss isn’t all doom and gloom — or it shouldn’t be, at least. 

First, Trump’s ability to exceed expectations set by pollsters, who largely expected a double-digit Biden win, is objectively impressive and an encouraging silver lining for the right. It shows the enthusiasm Trump attracted and that there’s a substantial populist base that the GOP can summon in 2024, an election they can win if they appeal to more swing voters.

But the biggest boon for conservatives from what’s a disappointing outcome is that the Senate will almost stay in Republican control. That means Biden’s plans for higher corporate taxes and stricter environmental regulations — which Wall Street scoffs at regardless of their merit — won’t pass unless they’re reasonable enough by Republican standards to get a thumbs-up.

Last week’s advice that “investors should hold the course through volatility — no matter who takes office” still holds true. Skittish shareholders that sold into the election are undoubtedly regretting their decision.

The sidelines are where Trump’s market cheering will happen come 2021, but investors shouldn’t put their money there. 

James Faris is a senior media arts and design major. Contact James at

Disclaimer: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I’m not receiving compensation for it, and I have no business relationship with any company whose stock is mentioned in this article.