With Joe Biden continuing to gather strength, his policies on issues from banking regulations to gun control will get fresh scrutiny from investors who’ve so far been comforted by the assumption he’s a moderate, analysts said after the former vice president’s string of primary victories on “Mini Tuesday.”

The $19 billion Health Care Select Sector SPDR Fund (ticker XLV) fell as much as 3.3% on Wednesday, less than the broad market decline. The health sector has been volatile as Bernie Sanders’ prospects have shifted. Health insurers came under pressure as the Vermont senator ran on a platform of Medicare for All, a single-payer system which would do away with private insurance markets.

Investors were rattled on Wednesday after the Trump administration failed to offer a comprehensive fiscal plan for handling the coronavirus outbreak.

Goldman slashed its S&P 500 forecast, calling an end to the bull market, and separately said the equity market is overly complacent about the possible damage from the coronavirus. Analysts are keeping a close eye on the virus’s economic impact for signals about President Trump’s chances for re-election in November.

Here’s a sample of the latest commentary:

Pangaea Policy, Terry Haines
Biden’s wins are “market positive in the short and medium term because they solidify the comforting narrative that the Democratic general election candidate will be a relative centrist and known quantity, not ‘democratic socialist’ Sanders,” Haines wrote.

However, Biden likely “becomes a market negative in the medium- to long-term because of increasing market unease about the ‘Biden Trojan Horse’ candidacy, particularly when coronavirus-related market concerns become assimilated or fade and more market attention returns to U.S. politics,” he said. Haines flagged “progressive-centrist disconnects” across the board, including on financial services, gun control and energy policies.

He also sees “meaningful general election implications” from Trump’s coronavirus stimulus efforts. If “congressional Democrats are unable to support many kinds of economic relief, including to energy producers, it is very likely to have materially negative effects on how the likely Biden ticket is viewed in swing states this fall.”

Haines gave Biden a 75% chance of winning the nomination outright, and sees Trump as a 60/40 general election favorite, adding that the “is Biden up to it?” narrative is taking hold and bolstering Trump’s chances.

Raymond James, Ed Mills
“Most of the immediate market impact of a Biden nomination was seen last Monday,” after his win in South Carolina, and following Super Tuesday, Mills wrote in a note. Now, “potential policy proposals of a Biden presidency will get more attention.”

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