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- Raymond James raised its estimates for a Democratic sweep to 55% up from 50%, while lowering estimates of a “status quo” Trump win and divided Congress to 30% from 35%.
- A team of analysts said cyclical stocks will perform well under a Biden-led blue-wave victory. They also named specific companies they believe investors should add in this outcome.
- Raymond James also said that technology stocks would do the best in a divided government scenario, while stocks in financials, energy, and healthcare would perform best with Trump in the White House and Congress divided.
Raymond James raised its estimates for a Democratic sweep to 55% up from 50%, with a 65% chance of a Joe Biden victory, and broke down what this outcome should mean for investors.
In two notes on Monday, a team of strategists led by Tavis McCourt said that the market is signaling a Biden victory is likely.
“The market has clearly rotated towards sectors that we believe are consistent with a Biden victory, and most noticeably a Democratic sweep, with small caps and more cyclical industries generally outperforming defensives, interest rate sensitives, and technology,” Raymond James said.
The strategists added that recent polling is pointing to a Biden win as well.
Although conventional wisdom would suggest a Democratic sweep would be negative for markets, especially for heavily regulated industries, current economic suffering could demand additional fiscal support, and that would be positive, the firm said. They added that in a blue wave victory, the US can expect tax increases, continued fiscal relief, and technology regulation.
In this scenario, cyclical stocks would outperform on the back of fiscal stimulus and inflationary expectations, according to Raymond James.
A few specific names the strategists said they believed would be the best positioned in a Democratic sweep included: Costco, Under Armour, Sunnova Energy, SunPower, Main Street Capital, MSCI, Delta Air Lines, Spirit Airlines, and United Airlines.
Raymond James also said that technology stocks would do the best in a split government scenario, with a Biden win but a Republican Senate and Democratic House.
In the status quo outcome, with Trump in the White House and a Republican Senate and Democratic House, Raymond James said financials, energy, communication services, healthcare, staples, utilities, and real estate would do well.