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Democratic National Convention: This Wall Street strategist isn't surprised stocks hit a record after day one of DNC

·Anchor, Editor-at-Large
·3 min read
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Day one done and dusted for the Democratic National Convention. And for some on Wall Street, it’s no small surprise that the S&P 500 notched a fresh record high the morning after.

Prudential Financial chief market strategist Quincy Krosby said the convention — which kicked off virtually Monday night — had all the feeling of a presidential candidate in Joe Biden that may be more moderate than investors fear. And with that stance, perhaps a president Biden would eschew some of the perceived anti-business extremes of progressives like Senator Elizabeth Warren and Congresswoman Alexandria Ocasio-Cortez.

“What’s interesting is that those of us who work in the market are watching and paying attention to some of these words that would suggest Joe Biden has been taken over by the left — words regarding financials, energy, and health care. I have colleagues who are focused on health care. They want to see if he even mentions the term public option because the market is sensitive to all of these buzzwords. So far, the market hasn’t been given anything in that regard,” Krosby told Yahoo Finance’s The First Trade.

The S&P 500 hit a record intraday high quickly after the opening bell Tuesday, surpassing the Feb. 19 high of 3,393. By early afternoon trading, the S&P 500 had dipped back below that level hit on Feb. 19.

FILE - In this July 28, 2020, file photo, Democratic presidential candidate former Vice President Joe Biden speaks at a campaign event at the William "Hicks" Anderson Community Center in Wilmington, Del. Biden’s campaign is reserving $280 million in digital and television ads through the fall, nearly twice the amount Donald Trump’s team has reserved at this point. The Biden campaign announced in a Aug. 5 memo it’s reserving $220 million on television airtime and $60 million in digital ads, in contrast to the $147 million the Trump campaign has reserved, according to a review of Kantar/CMAG data by the Associated Press.(AP Photo/Andrew Harnik, File)
FILE - In this July 28, 2020, file photo, Democratic presidential candidate former Vice President Joe Biden speaks at a campaign event at the William "Hicks" Anderson Community Center in Wilmington, Del. Biden’s campaign is reserving $280 million in digital and television ads through the fall, nearly twice the amount Donald Trump’s team has reserved at this point. The Biden campaign announced in a Aug. 5 memo it’s reserving $220 million on television airtime and $60 million in digital ads, in contrast to the $147 million the Trump campaign has reserved, according to a review of Kantar/CMAG data by the Associated Press.(AP Photo/Andrew Harnik, File)

With Biden leading Trump handily in most polls, anything that would suggest the former vice president would be more moderate — to Krosby’s point — would likely be welcomed news by investors. But, that doesn’t mean a Biden presidency would create rip-roaring economic growth and Dow 40,000. Fears on the Street continue on Biden’s proposal to hike the corporate tax rate to 28% from 21% and lift taxes on capital gains.

The increase in taxes suggest Biden could be a negative to U.S. GDP growth, according to research out of the independent Tax Foundation. Senior policy analyst Garrett Watson at the Tax Foundation estimates Biden’s overall tax plan would reduce GDP by 1.51% over the long-term. It would cost 800,000 jobs.

“There really comes a trade-off. That’s especially important right now as we are trying to rebuild the economy and get out of this economic crisis,” Watson said of Biden’s tax proposals on The First Trade.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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