How to Invest in This Fraught Election Year

Still, under those circumstances, if there’s a Trump victory: Expect more and higher tariffs, which could disrupt trade and be inflationary, and hurt “the consumer discretionary, industrials, and information technology sectors,” in the view of UBS, the financial services company. Mr. Trump would probably manage to lower taxes and increase the budget deficit, stimulating the economy but, again, goosing inflation — which could lead to higher interest rates. There is likely to be less regulation, with sectors like fossil-fuel energy and financial services benefiting.

If Mr. Biden is re-elected but Democrats don’t control Congress, the status quo continues. Expect greater regulation (though the Supreme Court on Friday limited the executive branch’s regulatory powers) and higher taxes for wealthy people and companies than under Mr. Trump, along with executive orders aiding “companies within industrials, materials, and utilities focused on renewables and energy efficiency,” according to UBS.

A landslide giving control of both the White House and Congress for either party would be unexpected and could disrupt the markets. Mr. Biden might be able to achieve legislative feats that have been out of reach. The probability of tax increases on the rich and on corporations rises. The chance of positive outcomes for clean energy companies increases, while banks and fossil-fuel companies will have a tougher time, or so the Wall Street thinking goes.

A Trump landslide would be the most unsettling outcome from a purely financial standpoint because he could impose policies that might radically change the way business has been done, and life has been run, in the United States. The New York Times is covering the plans underway for a second Trump administration. I won’t get into details here.

Neither a Trump landslide — or a Democratic one — has “been priced into the markets,” Anthony Saglimbene, chief market strategist for Ameriprise Financial, said in a briefing for journalists. “If we wake up on Nov. 6 and it looks like we have a one-party kind of control of Congress, I would expect volatility to increase.” But, he added, the markets are likely to recover rapidly. History tells us, Mr. Saglimbene said, that the market will refocus on interest rates and corporate profits “once it moves past the election cycle.”

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