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• Investors are assessing the potential market implications of a Kamala Harris presidency, focusing on policy, regulations, and taxation.
• Harris proposes to increase the corporate tax rate to 28%, which could reduce the U.S. budget deficit but impact corporate profits.
• Other proposals include banning price gouging on food and groceries, lowering healthcare costs, and introducing a child tax credit.
• The potential market impact of a Harris administration is a crucial consideration for investors as the 2024 election approaches.

As the Democratic convention unfolds, investors are keenly assessing the potential market implications of a Kamala Harris presidency. The late entry of Harris into the race, following President Joe Biden's withdrawal, has intensified the competition against Republican candidate Donald Trump. The focus is now on how a Harris administration could influence policy, regulations, and taxation.

Harris' economic proposals and her record as a U.S. senator and California attorney general suggest a more aggressive stance on consumer issues than the Biden administration. She seems to be on a track to be more aggressive than the Biden administration on a lot of these consumer issues that go right to the market, said Frank Kelly, senior political strategist at DWS Group.

One of the key proposals from Harris is to increase the corporate tax rate to 28% from the current 21%. This move is seen as a way to ensure billionaires and big corporations pay their fair share, contrasting sharply with Trump's record of slashing the corporate tax rate to 21% from 35%.

Harris' Tax Proposal and Its Implications

The proposed tax hike could help reduce the U.S. budget deficit by $1 trillion over the next decade, according to the nonpartisan Committee for a Responsible Federal Budget. However, it could also impact corporate profits. Goldman Sachs strategists estimate that each percentage point change in the corporate tax rate could shift S&P 500 earnings by slightly less than 1%.

"Anything that reduces earnings should ... have a negative impact on the stock market, said Peter Tuz, president of Chase Investment Counsel. However, he added that until the proposal is seen, there may be various offsets.

The tax proposal, like many others from both candidates, would require approval from Congress, which is currently narrowly divided between Republicans and Democrats. The control of the House of Representatives and Senate will be in contention on Nov. 5. Harris' tax proposal could face serious obstacles in a Congress that is divided or under Republican control.

Harris' Other Proposals and Their Potential Impact

In addition to the tax proposal, Harris has outlined a plan to ban price gouging on food and groceries, aiming to stop big corporations from exploiting consumers. She is also pushing to lower healthcare costs, with analysts expecting she could expand negotiating powers over prescription drug prices enacted during the Biden administration.

Lori Calvasina, head of global equity strategy research at RBC Capital Markets, said in a note this week that the proposals could weigh on consumer staples and healthcare stocks. However, Harris also pledged to introduce a child tax credit, which could lead to a pretty meaningful boost to consumer spending, said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.

King Lip, chief strategist at BakerAvenue Wealth Management, expects clean-energy initiatives launched under Biden to continue under a Harris administration. This could offer relief to shares of solar companies, which have faced headwinds from elevated U.S. interest rates.

In conclusion, the potential market impact of a Harris administration is a crucial consideration for investors as the 2024 election approaches. Historically, presidential elections have always had significant implications for the stock market and the economy at large. The 2008 election, which brought Barack Obama to power during the financial crisis, led to significant regulatory changes and a focus on healthcare reform. Similarly, the 2016 election, which saw Donald Trump's victory, resulted in significant tax cuts and deregulation. As such, the proposals and potential policies of Harris are being closely watched by investors, with the corporate tax rate, consumer issues, and clean energy initiatives being key areas of focus.