Zacks Investment Management

In today’s Steady Investor, we look at key factors that we believe are currently impacting the market, such as:

• Covid-19 cases increase in the U.S. and abroad
• Factories feel pressure as companies restock in anticipation of cold weather
• U.S. manufacturing sector rebounds
• How will the Trump and Biden tax plans impact investors?

The Pandemic Rages On, and Europe Implements New Restrictions – Covid-19 cases and hospitalizations are surging across the United States and Europe. The stock market appears to be taking note. On Wednesday, the S&P 500 plunged -3.58% as major European countries announced fresh economic restrictions, posting its biggest lost since June. Germany’s 16 states agreed to shutter restaurants, bars, gyms, concert halls, and theaters starting on November 2, for up to a month. Italy, Spain, and France are all pursuing similar economic restrictions, aiming for targeted measures meant to avoid a full lockdown. Here in the U.S., hospitalizations are up 50% over the last week and the daily case rate has regularly hit above 70,000.¹ The threat of another economic lockdown is low, but cities with spiraling hospitalization rates may need to pursue more targeted restrictions and closures. The stock market is likely to respond adversely to any planned economic restrictions.

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How Will the Trump and Biden Tax Plans Impact Investors?

In addition to Covid-19 cases rising, investors are keeping a watchful eye on the upcoming election and what the results could mean for the markets. As an investor, you know that the winning candidate’s policies can potentially have a huge effect on the economy and stock market—specifically through their tax proposals.           

That’s why we have prepared our free, in-depth guide that analyzes both the Trump and Biden plans. This report examines how their differing approaches to corporate, individual, and capital gains taxes have historically affected the economy and the markets.  

If you have $500,000 or more to invest, get this guide now, to help you prepare for the effects of the upcoming election on your investments—no matter which candidate wins.

How the Election Could Impact Taxes and the Stock Market²

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Factories Feel Pressure as Companies Restock in Anticipation of Cold Weather– U.S. manufacturing supply chains were squeezed hard during the spring, when Americans rushed out to purchase home and other goods in anticipation of lockdowns. Factories have largely recovered and normalized supply chains, but they are now facing yet another pinch as companies rush to restock ahead of cold weather months and an accelerating Covid-19 outbreak. Makers of cars, home appliances, home goods, and other products are scrambling to respond to inventory re-stock requests, particularly as U.S. consumers continue making purchases at a robust clip. For example, vehicle production has been back online fully for five months, but car dealers are still seeing stockpiles diminish. On the home improvement front, as workers leave urban centers and purchase homes for the first time, there has been a surge in demand for home office supplies, chairs, tables, refrigerators, washing machines, and on down the line. Some CEOs at major retailers estimate stock levels not to return to normal until early next year.³

Manufacturing is Rebounding with the Economy, But Remains in Long-Term Slump – The U.S. manufacturing sector has rebounded with the broader economy, with new orders for durable goods rising 1.9% in September compared to August.⁴ This growth in orders marks the fifth consecutive month of expansion. New orders for nondefense capital goods excluding aircraft –which tends to be an indicator for broader business investment – has now recovered all of its pandemic-related losses. While this rebound in the manufacturing industry offers a glimpse of hope for the beleaguered sector, it does not necessarily mark the early days of a resurgence for the manufacturing sector. A report this week in the Wall St. Journal suggests that the trade war against China has not yet achieved its goal of reversing the decline in U.S. manufacturing, even though billions in tariffs were meant to encourage domestic production. Job growth in the manufacturing sector started to slow when the trade war started in July 2018, and had nearly entered a decline before the pandemic struck.

A Look at the Potential Impact of Trump and Biden’s Tax Plans – Investors are keeping a watchful eye on the upcoming election and what the results could mean for the markets. As an investor, you know that the winning candidate’s policies can potentially have a huge effect on the economy and stock market—specifically through their tax proposals.        

That’s why we have prepared our free, in-depth guide⁵ that analyzes both the Trump and Biden plans. This report examines how their differing approaches to corporate, individual, and capital gains taxes have historically affected the economy and the markets.  

If you have $500,000 or more to invest, get this guide now, to help you prepare for the effects of the upcoming election on your investments—no matter which candidate wins.

Disclosure