The financial sector is one of the best performing parts of the stock market in Wednesday's rally, and American Express Company (NYSE:AXP) is doing even better than most. As of 2:45 p.m. EST, the credit card and financial service company's stock was higher by 6% for the day.
The driving force behind today's gains doesn't seem to have much to do with American Express' business, or with the business of any other bank or financial service company. Instead, the results of the Super Tuesday democratic presidential primaries seem to be moving the stock higher.
Specifically, moderate candidate former Vice President Joe Biden performed far better than expected. And, with fellow moderate Michael Bloomberg exiting the race, it looks much more likely that Biden will ultimately receive the nomination.
Simply put, the economic policies of more liberal democrats such as Bernie Sanders would likely be a negative catalyst for the profits of financial services companies. And the more middle-of-the-road policies of Biden's platform are generally seen as more favorable.
To be clear, any democratic president has the potential to be a negative factor when it comes to corporate profits. Under a democratic administration, it's probable that corporate taxes would increase and regulations would become somewhat stricter. However, today's price action shows that Biden is clearly perceived as more friendly to the financial sector than his more progressive rival.
Finally, it's also worth mentioning that Amex has been one of the hardest-hit stocks in the recent market turbulence. Lower interest rates are a negative for bank profits, so the stock had been trading for just over its 52-week low before today's move.