With Joe Biden resigning from the presidential elections, the share market is in obvious fluctuation. Why does this happen? Do political changes and policy enactments really affect the stock market to that level? Well, it affects the economy, and while in some cases the effect is not immediate, it still affects stocks to a certain extent. Find out all the changes we may see in the market before and post general elections.
Defense
An analysis of historical data on defense spending tells us that the US military spending has been up to 2.13 trillion dollars (about $6,600 per person in the US). Any changes in policy would be based on who takes office in the general elections. If it is the Republican party, then you can expect military expenditure to be ramped up. This will undoubtedly affect the stocks of companies manufacturing weapons and other military equipment. Look out for companies like Lockheed Martin, and General Dynamics to see if their stocks have changed or not.
Healthcare
Healthcare spending in the USA has been 4.5 trillion dollars. This expenditure points to the fact that healthcare being a major industry, elections and newer policies can obviously affect the direction in which healthcare is going. If the Republican administration takes office in the 2024 elections, prescription drug prices will reduce, and women’s healthcare like abortion, or medicine for transgender people will drop. The stocks of the companies who produce medicines are likely to be affected.
Finance
The stock market continued to rise post the Republican win back in 2016. Ex-President Trump claimed he was responsible for the rise because he tweeted non-stop about the stock market. In fact, post-2016 the market saw an increase in investments more than the Obama run administration before 2016. However, post-COVID, the market has been on the mission to gain back its once great heights. Hence, if healthcare, housing, safety and other COVID affected industries get back on track, then the market will continue to rise.
Foreign Policy
Historically speaking, isolationist policies of the US have been a huge definer of foreign policy. Yet, in the past four years, the Biden administration has been in support of Ukraine in their war with Russia. Moreover, the Trump administration is more or less promising isolationism, then the stock market might be affected of the companies who are an active part of conflicts across the world.
Elections are definitely a powerful force when it comes to making or breaking a market, all because they decide who will come to power and what policies those in power will bring. An important consideration, hence, and an important level of information for people who are planning on investing in the stock market.
