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Sell Stocks If a Trump Win Drives a Rally, Citi Strategists Say

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US stocks may be rallying ahead of a potential victory for Donald Trump in next week’s US election, but for strategists at Citigroup Inc., a clean sweep for the Republican party will be a signal to sell.

Scott Ladner, chief investment officer of Horizon Investments, talks about a market playbook for a presidential victory.

A Trump win is generally seen as good news for stocks because his proposals to lower corporate taxes would likely benefit company earnings. The Citi strategists argue, however, that the “near-euphoric sentiment” that’s driving the S&P 500 Index toward a sixth straight month of gains is leaving it ripe for a pullback.

The gains that have pushed the benchmark index to a record high have largely been driven by economic growth and corporate earnings, though a recent shift in betting markets in favor of a victory for Trump has also helped. Vice President Kamala Harris’s policies to potentially hike taxes have been viewed as relatively more bearish for stocks. Most major polls show the two candidates in a dead heat.

 

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