When Donald Trump won the 2016 US presidential election, the overall market response was weak, but there were significant sector-specific moves, analysts explained in a note this week.
Financial institutions, especially banks and insurance companies, led the way with significant gains, the investment firm said. Sallie Mae shares rose 37% and Freddie Mac shares rose 97% in seven trading days.
According to analysts, bonds and bond proxies, such as utilities and REITs, sold off, as investors expected an expansionary fiscal package and lower corporate tax rates.
The healthcare sector, especially pharmaceuticals and biotechnology, has witnessed a recovery. Analysts noted that biotech ETFs rose more than 10% the day after the election Pfizer (NYSE:) is seeing an increase of 7.1%.
Conversely, hospitals like HCA (NYSE:), LifePoint Health, and… hundreds (NYSE:), which was heavily tied to Obamacare, fell by double digits on concerns about the potential repeal of the Affordable Care Act.
Conventional energy stocks rose, led by coal producer Peabody, which jumped 50%, while alternative energy stocks were sold off. Defense stocks also rose.
According to analysts, trade-related issues caused the value of the Mexican peso to decline and Kansas City Southern (NYSE:), a railroad company dependent on trade with Mexico. US Steel, a beneficiary of the expected tariffs, rose 17%.
Small stocks, including prisons and for-profit colleges, saw some of the biggest moves, analysts noted. Interestingly, gun makers, who were under Clinton, declined by about 15% as the threat of gun control eased, leading to an expected decline in gun sales.
