The selection of Rep. Paul Ryan for the 2012 Republican ticket is shaking up the White House campaign, but will the move have an impact on the stock market?
Major market indices were down Monday on the first day of trading following the announcement of Ryan as Mitt Romney's vice presidential choice.
Chuck Gabriel, president of Capital Alpha Partners, said the prospect of Ryan becoming vice president could weigh on stock prices later this year.
The Wisconsin Republican’s budget blueprint, which was released in 2011, aims to overhaul the nation’s social safety net and Medicare. Gabriel said the plan, which he likened to a budgetary “root canal,” is being seen as a vote for austerity globally.
Once the stock market has moved past concerns such as the Europe's debt crisis, the fiscal cliff and persistently high unemployment, “stocks won’t do any better because we are moving into an austerity cycle that’s going to be exacerbated" by the Ryan plan, Gabriel said.
Kevin Caron, a market strategist at Stifel Nicolaus, said the market isn’t likely to react to Ryan’s appointment immediately because he is one of the candidates that market watchers had expected Romney to pick.
In general terms the market sees the Ryan choice as a balanced one, he told CNBC.
“I think the choice of Paul Ryan falls somewhere in the middle of the spectrum,” Caron said. On the one hand, right-leaning think tanks say his budget proposal doesn’t go far enough, while left-leaning observers say it only benefits the country’s top 1 percent, he said.
The market has been on the rise of the past few weeks because investors see some signs of improvement in the European debt crisis, and also conjecture about the Fed injecting more monetary stimulus into the economy, Caron said.