Market Shifts After Trump-Harris Debate: Investors Flock to Bonds as Stocks and Crypto Slide

The stock market reacted cautiously following the highly anticipated presidential debate between Kamala Harris and Donald Trump on Tuesday, Sept. 10, 2024. Investors closely monitored the exchanges for potential impact on the financial markets, resulting in a mixed day on Wall Street.

However, the crypto market fell after the debate as the position of the Republican candidate worsened following the clash with the current Vice President. Investors decided to be more cautious, betting on U.S. bonds.

Stock Reaction to the Trump-Harris Debate

U.S. stocks closed with a mixed performance on Tuesday, Sept. 10, 2024, as investors assessed the impact of the overnight presidential debate. The S&P 500 rose by 0.4%, nearing its July record, though it fluctuated throughout the day amid concerns over the slowing economy and potential interest rate cuts.

The Dow Jones fell by 92 points, down by 0.2%, while the Nasdaq gained 0.8%, driven by Big Tech. Bank stocks struggled, following discouraging remarks from executives.

Meanwhile, the “Trump trade” effect, linked to his tariff policies, saw the U.S. dollar strengthen against other currencies. Shares of Trump Media & Technology Group  tumbled by 17%, hitting their lowest point since the Truth Social owner went public in late March.

Trump’s company stock has been down by 77% since its March peak. At the end of the first quarter of 2024, DJT shares were worth $66.22, compared to the current value of $15.76. At the time of writing, the stock is losing a further 15% from the day before, burning $2.85 per share.

Crypto Falls After the Confrontation

Trump’s debacle in the debate against Democratic candidate Harris also hit the cryptocurrency market, as the Republican representative is seen as a stronger advocate of digital assets. Bitcoin (BTC), the world’s largest cryptocurrency, trimmed its losses but remained down by 2%, while Ethereum (ETH) declined by 2.6%.

Crypto miners Riot Platforms, Marathon Digital, and U.S.-listed Hut 8 saw their shares decrease between 3.6% and 5.3%. Meanwhile, software firm and major Bitcoin holder MicroStrategy fell by 5.4% and is currently losing 4.6%.

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Crypto exchange Coinbase Global is down by 4.4% after closing yesterday, after the debate, down by 3.6%. The blockchain operator Bitfarms lost 3.8% on Tuesday and is down by 5.7% after the bell rang.

Russ Mould, investment director at AJ Bell, commented: “A tense U.S. presidential election debate between Kamala Harris and Donald Trump only had a limited impact on the markets. While polls suggest people’s voting intentions swung more towards Harris as a result of the debate, the election is still going to be a close call.

“Cryptocurrency was the main focal point for market movements. Trump is seen as being pro-cryptocurrency and a weaker position in the polls following the debate might explain why the price of Bitcoin retreated by 2%.”

Bond Yields Decline

Bond yields plunged on Wednesday, driven by Democrat candidate Harris’ strong performance in the debate. Investors bet on a potential decline in interest rates under a Harris administration, while a Trump victory was seen as likely to lead to higher spending and rising rates.

Ten-year Treasury yields fell to 3.607%, a significant drop from their recent high of 4.25%, signaling a shift in market sentiment.

Brown Brothers Harriman analysts said: “Financial markets appear to be unwinding the so-called “Trump trade” after the debate. While it’s too soon for updated polling data, the initial reaction in the betting markets suggests Vice President Harris won last night’s debate against former President Trump. Furthermore, the current financial market reaction is the exact opposite of the post-June presidential debate response, when Trump emerged as the clear winner against President Biden.

“Following the June 27 debate, the dollar firmed slightly, U.S. Treasury yields rose, and U.S. stocks rallied.  The macroeconomic logic is that fiscal and trade policies under a Trump presidency are inflationary, forcing the Fed to keep policy restrictive for longer.  That said, we believe U.S. economic outperformance will continue to support the dollar.”