Tags: Romney | stock | market | fall

Romney's Surge in Polls Leads to Drop in Stocks

By    |   Friday, 12 Oct 2012 07:47 AM

The stock market reached a short-term top the morning after Republican presidential nominee Mitt Romney trounced President Barack Obama in their first debate. Romney’s performance seems to be a hit with likely voters, but investors might not be looking forward to a Romney presidency.

Stocks fell nearly 2.5 percent in the days after the debate, and speculative stocks fared significantly worse, falling 4.3 percent in three days.

Historically, stocks have enjoyed big moves when the outlook for the presidential election changes. A downturn caused by a Romney surge is entirely possible.

Editor's Note: 5 Signs Stock Market Will Collapse in 2013

In the shorter term, what might be good for the economy might not necessarily be good for the stock market.

Stocks fell more than 20 percent in the first year and a half of Ronald Reagan’s presidency. In order to set the stage for the greatest bull market in history, Reagan oversaw actions that were painful at first. Stock market investors were ultimately rewarded with gains of more than 1,700 percent over the next 18 years and have long since forgotten high interest rates and two recessions.

Romney has stated that he would not reappoint Federal Reserve Chairman Ben Bernanke. A new Fed chief might not believe that throwing money from helicopters is the best way to stimulate economic growth. Bernanke’s easing policies have boosted stock prices, and a change in leadership at the Fed could force investors to focus on earnings and price-to-earnings ratios rather than on quantitative easing.

Earnings look weak for many companies and without the third round of quantitative easing, they would probably be overvalued. Romney might take away the money that has fueled Wall Street in the past three years, and a decline is very possible if his gain holds until November.

Editor's Note: 5 Signs Stock Market Will Collapse in 2013


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MichaelCarr
The stock market reached a short-term top the morning after Republican presidential nominee Mitt Romney trounced President Barack Obama in their first debate. Romney’s performance seems to be a hit with likely voters, but investors might not be looking forward to a Romney presidency.
Romney,stock,market,fall
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2012-47-12
Friday, 12 Oct 2012 07:47 AM
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