President Trump’s announcement that he tested positive for the coronavirus on Friday sent market indexes lower.
Count it as another thing for investors to worry about. His claims of mail-in voting fraud and actual reports of absentee ballot mishaps have already put many investors on edge as they fear that election results on Nov. 3 may be contested and potentially lead to a protracted battle that could end up in the Supreme Court.
Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!
— Donald J. Trump (@realDonaldTrump) October 2, 2020
The last time a presidential election was contested was in 2000 when George W. Bush and Al Gore were vying for the White House. That year, the S&P 500 dropped about 12% from the close on Election Day through Dec. 20.
Thomas Lee, managing partner and the head of research at Fundstrat Global Advisors, wrote in a note Friday that Trump’s positive test is a “positive development” for coronavirus compliance in the U.S. and “good for markets.”
The president’s treatment and recovery would be a validation of the strength of U.S. therapeutics if Trump recovers, Lee wrote. According to Lee, if Trump recovers quickly, it would ultimately be good for markets. Federal Reserve Chairman Jay Powell has reiterated numerous times that a full economic recovery won’t be possible unless an effective treatment or vaccine is found.
“It would give me a sense that the U.S. has a better handle of treatment, reducing risks of mortality. [It] shows the path of COVID-19 might be getting better,” Lee wrote.
The U.S. has seen a recent rise in coronavirus infections in about 20 states. More than 7 million people in the U.S. have been infected, and at least 207,600 people have died as of Oct. 2.
In defending the administration’s response to the pandemic during this week’s presidential debate, Trump said “fewer people are dying when they get sick. Far fewer people are dying. We’ve done a great job.”
During the debate, Trump also touted the efforts of companies such Moderna (MRNA), Pfizer, (PFE) and Johnson & Johnson (JNJ) in seeking to develop an effective vaccine and therapeutic treatments for the coronavirus.
TD Securities analysts wrote that Trump’s positive test may also upend the race by boosting the president’s approval ratings.
“While one could argue that the news is an unequivocal positive for Biden, we don’t think it is so straightforward. Other world leaders such as [Boris] Johnson and [Jair] Bolsanaro got a significant boost in their approval ratings after they got COVID,” wrote TD Securities analysts Richard Kelly, Priya Mira, and Ned Rumpeltin.
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