How the Markets Reacted to the Trump-Harris Debate

Kamala Harris put Donald Trump on the defensive from the get-go and appeared to handle the debate better than Hillary Clinton in 2016 and Joe Biden in 2020 and 2024. But the reality is that the chances of winning the US Presidential Election are still wide open for both candidates. This was the first time that Harris participated in such an event. While she seemed nervous in the beginning, she found her voice fairly quickly. What distinguished Harris from Trump was her calm demeanor. She appeared in control throughout the debate.

Takeaways from the Presidential Debate

The approaches of the two candidates had stark differences. Vice President Kamala Harris used the opportunity to clarify her position on fracking, stating that she intends to invest in various energy sources to reduce America’s dependence on oil imports. She also talked about her policy on tax breaks for small businesses and parents of young children. She highlighted how first-time home buyers would be supported with credit for down payments.

Harris did not leave any opportunity to attack Trump on the state he left the economy in, the January 6 attack on Capitol Hill, handling of the pandemic and immigration. Her jibes got under Trump’s skin, especially when Harris talked about people leaving his rallies “early out of exhaustion and boredom.” She painted him as a bad businessman, given that Trump had inherited $400 million “on a silver platter and then filed for bankruptcy six times.” The most memorable statement for Democrats was probably Harris’ statement that Trump was “fired by 81 million people” in the 2020 election and was now “confused” about having lost.

Donald Trump, on the other hand, repeated his favourite conspiracy theories, seemed incoherent and meandering at times, and preferred to make personal attacks on Harris and Biden rather than clarify his policy stance. Most prominently, when asked about healthcare and the Affordable Care Act, he stated that he had “concepts of a plan.” He was less sure of the future of the country’s healthcare system than of the future of pets.

In the end, viewers were left with little new information on either candidate’s plans for the US economy. What surprised many was Trump’s decision to go to the spin room and talk to reporters after the debate. This isn’t something that a candidate who has had a good debate usually does. In fact, low-polling candidates, who believe they didn’t get enough attention or time to clarify their position during the debate, tend to address reporters afterwards.

The Washington Post surveyed a group of uncommitted, swing-state voters about their reactions to the debate in real-time. The results show that the respondents felt that Kamala Harris performed better, although they might not have yet decided on who to vote for in November. The Washington Post went on to say, "Harris appears to have solidified the support of voters who were leaning in her direction.”

How the Markets Reacted to the Debate

Investors closely followed the September 10 debate, which was reflected in the market moves witnessed on September 11. Kamala Harris seemed to have made quite an impact on viewers, given that Trump Media & Technology Group, the parent of Truth Social, declined 13%. Trump has positioned himself as a pro-crypto candidate. Following the debate, Bitcoin fell almost 4% and remained flat on September 11 while crypto-focused stocks, including Riot Platforms, a crypto miner, declined.

On the other hand, given Harris’ focus on green energy, stocks of solar companies rose. For instance, the Invesco Solar ETF, which was down almost 35% YTD, rose 5% on September 11, while First Solar was up more than 15%. First Solar’s stock recorded 35.52% YTD gains a week after the debate, on September 17. Acuity’s AssetIQ widget confirms bullish sentiment for First Solar.

Although the election is unlikely to have a significant impact on the broader market, some segments are definitely more sensitive to which candidate appears to have a greater chance of winning. For example, a Trump victory could adversely affect oil prices, since he intends to increase production, while a Harris win could benefit renewable energy and semiconductor stocks. Following the debate, green economy and renewables stocks climbed around 4% each and oil rose 2.1%. This indicates expectations of a Harris win.

Conversely, the CHIPS Act will continue to support semiconductor stocks, regardless of which candidate wins, given that the demand for chips and other components required for the AI race is likely to continue to rise. This is reflected in the very bullish sentiment for Taiwan Semiconductor Manufacturing in Acuity’s AssetIQ widget.

Investors will also focus on how each candidate intends to implement their tax and tariffs plans. Trump intends to lower the corporate tax rate from the current 21% to 15%, which could prove beneficial for S&P 500 companies. On the other hand, Harris intends to raise the tax rate to 28%, which would cut into the profits of S&P 500 stocks.

The Bottom Line

While the upcoming election will remain a key focus for investors, broader economic concerns are likely to take precedence. There already are worries about a potential softening of the US economy, following the CPI for August, which reflected sticky inflation. This creates uncertainties regarding the Fed's rate cuts. The underwhelming jobs data for August led the S&P 500 to see its worst weekly loss since March 2023.

So, while investors must keep an eye on the political developments, economic releases will continue to drive market sentiment.