Trump vs. Biden First Presidential Debate: ETFs in Focus

Sweta Killa
·5-min read

After months of campaign, President Donald Trump and Democratic nominee Joe Biden will come face-to-face on debate stage on Sep 30 in Cleveland. This will be the first of the three debates between the two candidates before the election on Nov 3.

Both candidates will debate on six topics – their track records, the Supreme Court, COVID-19, the economy, race and violence in cities, and the integrity of the election. According to the Dow Jones data, going back to 1960, the stock market dropped 0.14% on average the day after the first presidential debate, witnessed 1.51% decline from the first debate to the next, fell 2.51% between the first debate and the final presidential face-off and recorded a 0.35% dip from the first debate to Election Day.

Ahead of the debate, let’s take a closer look at some of their strategies and the likely impact on the ETF world:

Poll Tracker

Joe Biden maintains a steady lead over Donald Trump in national polling at 10-percentage point margin, per the Washington Post and ABC News. The lead was also reflected in an Emerson College/NewsNation poll, which shows Biden leading by 4 percentage points. A new MPR News/Star Tribune/KARE-11 Minnesota Poll of 800 registered voters shows former Vice President Joe Biden leading President Donald Trump by 48-42% with 8% undecided (read: A Biden Presidency in the Making? ETF Strategies to Follow).

According to the Telegraph's poll tracker, Donald Trump's presidential approval ratings are at steady levels. The tracker put Trump's approval rating at around 44%.

Trump vs. Biden

Tax Policy

One of the top priorities of Biden is to partially roll back corporate tax cuts from 38% to 21% enacted under Trump administration and raise the top income tax rate back to 39.6% from 37%. Biden is looking to hike corporate tax rate from 21% to 28% that will result in lower profits and likely reduce share prices.. As such, WisdomTree US Earnings 500 ETF EPS, which offers exposure to broad U.S. large cap profitable companies, will be in the spotlight (read: All About Biden's Tax Plan & Its Impact on the ETF World).

Healthcare

Though both presidential candidates are in support of reducing drug prices, Biden has vowed to expand the Affordable Care Act — the health care overhaul that former President Barack Obama signed into law in 2010. Meanwhile, Trump is fighting to dismantle Obamacare.

In the 2021 budget proposal, the Trump administration has suggested deep health care spending cuts over the next decade, especially to Medicaid ($900 billion) and Medicare ($450 billion). On the other hand, Biden opposed to Medicare for All and wants to create a public health insurance option. He wants to lower Medicare eligibility age to 60.

Given this, healthcare ETFs like iShares U.S. Healthcare ETF IYH, Invesco DWA Healthcare Momentum ETF PTH and iShares U.S. Healthcare Providers ETF IHF are in focus.

Clean Energy

While Trump has pulled America out of Paris climate agreement, Biden wants to rejoin. He proposed to invest in sustainability and clean energy while Trump is a strong supporter of the fossil fuels industry. Biden aims to pump $2 trillion into green energy over four years to build solar panels, charging stations and more. The clean energy space has been soaring this year with Invesco Solar ETF TAN and ALPS Clean Energy ETF ACES making the most of Biden’s proposed promise (read: Here's Why Clean Energy ETFs Are Shining Bright).

Big Tech

The big technology giants are expected to face increased scrutiny, regardless of whoever wins the election. Trump will maintain or possibly accelerate the broad-scale regulatory scrutiny of technology companies that marked his first term. This includes allegations of anticonservative bias online, antitrust investigations of Internet giants such as Alphabet GOOGL and Facebook FB, and actions against China-owned apps such as TikTok and WeChat. On the other hand, Biden is a supporter of stricter antitrust oversight and online privacy rules. He, on his campaign, has emphasized forcing social media companies to better control their sites against false information, and taking government action to help workers under threat from innovations such as self-driving cars.

Jobs and Wages

Though both the candidates want to create jobs through infrastructure investments, Trump is expected to continue "Buy American, Hire American" immigration agenda. Meanwhile, Biden wants to raise the federal minimum wage to $15. The policies have brought consumer discretionary ETFs like Consumer Discretionary Select Sector SPDR Fund XLY and Invesco DWA Consumer Cyclicals Momentum ETF PEZ in the spotlight.

COVID-19

Biden's plan to address the pandemic includes offering free testing to all Americans. It calls for hiring 100,000 people for national contact tracing, as well as increasing drive-thru testing sites. On the other hand, Trump's administration has urged Americans to practice social distancing and wear masks to slow the spread of the virus. This policy has accelerated digitalization, giving boost to the stay-at-home ETFs like Direxion Work From Home ETF WFH, Roundhill Sports Betting & iGaming ETF BETZ and WisdomTree Cloud Computing Fund WCLD (read: Stay-At-Home ETFs to Soar Further on New Lockdown Measures).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Facebook, Inc. (FB) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Invesco Solar ETF (TAN): ETF Research Reports
 
iShares U.S. Healthcare ETF (IYH): ETF Research Reports
 
Invesco DWA Healthcare Momentum ETF (PTH): ETF Research Reports
 
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
 
iShares U.S. Healthcare Providers ETF (IHF): ETF Research Reports
 
WisdomTree U.S. LargeCap ETF (EPS): ETF Research Reports
 
Invesco DWA Consumer Cyclicals Momentum ETF (PEZ): ETF Research Reports
 
ALPS Clean Energy ETF (ACES): ETF Research Reports
 
WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
 
Roundhill Sports Betting iGaming ETF (BETZ): ETF Research Reports
 
Direxion Work From Home ETF (WFH): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report