Why the November elections are a victory for the stock market, no matter who emerges victorious

• Ned Davis Research predicts a stock market rebound in 2025, regardless of who wins the election in November.

• Both Kamala Harris and Donald Trump have proposed economic plans that would stimulate growth, NDR reported.

• Economic stimulus measures combined with falling interest rates should give share prices a boost.

Regardless of who wins the presidential election in November, it will be a victory for the stock market, according to Ned Davis Research.

The research firm said in a statement Wednesday that both the economic policy proposals of Democratic candidate Kamala Harris and Republican candidate Donald Trump would stimulate the economy.

“Based on the annual average of these limited estimates, both Harris and Trump will increase the budget deficit by $220 billion to $650 billion per year, which will boost economic growth,” said Veneta Dimitrova, NDR's senior U.S. economist.

This, together with the expected interest rate cuts by the US Federal Reserve in 2025, should lead to a riskier environment for the stock market.

Key stimulus proposals from the Harris camp include extending the 2017 TCJA tax cuts to households earning less than $400,000 a year, increasing the child tax credit to $3,600 per child and $6,000 per newborn, and eliminating the income tax on tips.

Trump's economic stimulus measures include extending the 2017 TCJA tax cuts to everyone, increasing the child tax credit to $5,000 per child, and eliminating income taxes on Social Security benefits for seniors.

Trump also advocates the abolition of income taxes on tips.

Below is a list of both candidates' economic proposals and their estimated impact on the federal deficit.

Possible stimulus measures from Trump or Harris come on top of the hundreds of billions of dollars in stimulus packages that are coming to the economy thanks to legislation already passed during the Biden administration.

“Such a stimulus will be combined with other government spending already provided for under the Biden legislation, including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS Act, which are expected to result in an estimated $357 billion in direct government spending by 2031,” Dimitrova said.

She added: “Regardless of who wins the election, this will provide a tailwind for economic growth and stock markets in 2025.”

According to the statement, the US dollar is expected to fall again next year, especially if the US deficit continues to grow. In addition, a weaker greenback tends to benefit corporate profits and US stock prices.

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While the potential trillions of dollars in stimulus could be significant for the economy and the stock market, it could also trigger a further rise in inflation.

This would be especially true if Trump's proposals for comprehensive tariffs or Harris' price gouging measures were implemented, Dimitrova said.

However, it must be remembered that these are proposals and that the adoption of these proposals depends on which party wins the majority in Congress.

“Ultimately, the composition of Congress, which could also change in this election, will determine the feasibility of these proposals and could act as a check on spending and tax changes,” Dimitrova said.

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