Biden Leading Election 2020 Polls To Blame For Market Plunge, Analyst Suggests

Presumptive Democratic Party presidential candidate Joe Biden is to be blamed for the stunning reversal of fortunes this week on Wall Street, claim some alarmed analysts.

According to them, this was because of the stubborn perception that a Biden presidency will be bad for business (think overturning the Trump tax cuts) and very bearish for equities. Investors also worry a blue wave in November, where Democrats seize the presidency and both Houses of Congress, will mean major economic changes that will affect markets in a negative way.

Biden beating Trump is almost certain if polls are to be believed. Polls since April 2019 consistently showed Biden denying Trump a second term. The latest poll from The New York Times and Siena College showed the former vice president ahead of Trump, 50% to 36%.

Many Wall Street analysts still warn their clients a Biden presidency won't be good for Wall Street. Canadian global investment bank RBC Capital Markets said 60% of its clients now believe a Biden White House will be bearish or very bearish for equities. Only 24% of its clients held this opinion in December 2019.

The same poll also found the November general election is the greatest source of worry among RBC clients. A full 73% of the bank's clients said so. Next on the worry list is the COVID-19 second wave (68% of respondents) while third is a second wave of layoffs (63%).

All three indices closed lower Wednesday with Thursday futures foretelling more of the same amid thin overnight trading. Futures on the Dow Jones Industrial Average plummeted 132 points. S&P 500 futures and NASDAQ 100 futures were in the negative.

The Dow plunged 710 points (down 2.72%). The S&P 500 shed 2.6% while the tech-heavy NASDAQ gave up 2.2%. It was the worst day for all three indices since June 11. The NASDAQ also saw an end to its eight-day winning streak. The S&P 500 has lost 5% since June 8 after hitting its highest level since Feb. 25.

The Wednesday selloff moved CNBC host and hedge fund manager Jim Cramer to say, “This to me is a Biden move. When I see across the board selling today, that’s Biden ... he sounds like another president that you get that is not favorable to capital. If that’s the case, I want to have a little cash.”

The reason for the Wednesday selloff was clear -- the surge in COVID-19 cases throughout the country. Adding to investor dismay were the record-high new cases in California, Texas and Florida. Travel restriction imposed by New York, New Jersey and Connecticut on states that don’t meet their safety criteria also stunned investors.