Most U.S. equity investors still expect Democratic nominee Joe Biden to beat President Donald Trump in November — but fewer now view that scenario as bearish for stocks, according to a new survey from RBC Capital Markets.
According to the results, 57% of investors expect Biden and the Democrats to win in November, down from 63% in the June survey. Meanwhile, Trump’s numbers actually rose to 43% in September, up from 37% in June.
According to Lori Calvasina, RBC's head of U.S. equity strategy, "investors appear most worried about a contested result in the Presidential race. Concerns about the implications of a Biden victory for stocks have eased, though most of our participants think the Senate will stay under Republican control.”
The September investor survey shows that less than half of investors, approximately 41%, view a Biden victory as bearish for the stock market. In RBC's June poll, 60% of investors thought a Biden would be bearish.
According to Calvasina, investors are "feeling a little more optimistic" on stocks compared to the June survey. She pointed to "a slight pickup in overall economic outlooks and optimism on another round of stimulus" as drivers of this sentiment shift.
To be sure, investors remain concerned around high valuations, the long road ahead for the economic recovery, and the upcoming election.
The survey shows that investors who view a Biden victory as "bullish" or "very bullish" ticked up to 13% in September from 7% in June. What's more, the most popular response for a Biden outcome is that it would be "neutral" for the market, according to 46% of investors.
Biden’s numbers, however, are well below the ideal bull market outcome — which would be a Trump victory. Approximately 63% still think Trump's re-election would be "bullish" or "very bullish" for stocks, modestly down from 65% in June. Only 11% of investors view a Trump victory as "bearish" or "very bearish," up from 5% in the prior survey.
Yet 62% of investors — up from 57% in June — believe the Republicans will maintain control of the Senate. This view is at odds with the betting markets, which show rising odds of a Democratic sweep that would put the White House and both houses of Congress under one-party control.
Approximately 67% of RBC’s investors view a Democratic sweep as a negative for the market, versus 84% in June.
The majority of investors, or 69%, think a Republican sweep would be “bullish” or “very bullish” for stocks, off from 75% in June.
RBC polled 90 institutional investors mostly focused on U.S. equities between Sept. 21 to 29.
Julia La Roche is a Correspondent for Yahoo Finance. Follow her on Twitter.