Wall Street’s recovery stalls as Covid and election loom

If sentiment were to slide further, perhaps on the back of a second wave of infections or a deterioration in relations with China, even that might seem optimistic.

Three fifths of investors polled in a recent survey by RBC Capital Markets said Biden would be bad for the market compared with just 24pc when it seemed a more remote possibility last December. Nearly three quarters (73pc) said the election was a concern, higher than the 68pc who cited Covid-19 and 63pc who were focused on rising unemployment.

What are investors worried about? First, and foremost, tax. Biden has made clear that he would reverse the 2017 Trump tax cuts that have done so much to drive the stock market higher in the president’s first term.

For companies, that would mean handing back half of a reduction from 35pc to 21pc in the statutory rate, although the impact on the effective rate most businesses actually pay would be smaller. For wealthy individuals, it would involve a return to the previous top rate of 39.5pc (from today’s 37pc) – hardly punitive by European standards and only affecting people earning more than $400,000 a year.

Some companies would also find themselves squeezed by a proposed increase in the minimum wage to $15 an hour from a barely life-sustaining level of around half as much today. There would be sector-specific challenges too, with Biden likely to reverse Trump’s environmentally-blinkered support for fossil fuels and to increase the squeeze on big tech.

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