How Markets May React to Biden


Wall Street was happy with inauguration day, logging the biggest January 20 inauguration day gain in 36 years, closing up more than 250 points. It was the biggest day ever for the NASDAQ Composite.

How long will the honeymoon last?

Expect a mixed bag, suggests STA Wealth Management President Michael Smith. Wall Street is anxiously eyeing a $2 trillion proposal for infrastructure spending, but seems to forget about tax increases.

“It’s not clear what this means for the overall markets. While there might be a move back in taxes there could still be some good sectors and areas that do very well given the amount of spending and infrastructure spending we see going forward,” Smith tells KTRH News. No president promising new infrastructure promises has been able to get a compliant Congress to agree, so this could be another pipe dream that goes up in smoke. More likely to reach fulfilment is President Biden’s promise to roll back the Trump 2017 tax cuts.

“We’ve heard Joe Biden’s campaign. He says they plan on raising the corporate tax rate from 28% to 21% and it seems like people just don’t think that’s going to happen,” Smith says. The markets that smell money from infrastructure are less inclined to like the aroma of higher taxes.

Photo: Getty Images

Sign for Famous K Street in Washington DC, home of the lobbyists.

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