Investors may 'sit on sidelines' awaiting US Democrat choice
An American stock market that has reached record highs despite trade wars, weak earnings and a US-Iran conflict faces a new obstacle: the 2020 US election season.
Investors are bracing for more volatility as Democratic voters in Iowa and New Hampshire kick off the primary season. Clues about which candidates have momentum will emerge tomorrow, when the Democratic Party field holds its next debate.
Stocks could retreat if a progressive candidate scores early victories or market-friendly moderates stumble.
The market may face uncertainty for months awaiting selection of the Democratic candidate, who would face a hard-fought race against President Donald Trump.
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"Investors could sit on the sidelines waiting for more clarity around the election," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. "It wouldn't surprise me, especially coming off what has been a very solid year in markets, for investors to take a wait-and-see approach."