Written by Ankika Biswas and Pranav Kashyap
(Reuters) – Just days before the U.S. presidential election scheduled for Nov. 5, investors are trying to gauge how stock markets will react as opinion polls and betting platforms point to a close race between Vice President Kamala Harris and former President Donald Trump.
Harris’ lead over the Republican narrowed to one percentage point in the final stretch of the presidential race, according to a Reuters/Ipsos poll published on Tuesday.
A majority of the ten analysts Reuters spoke to expect that Trump’s return will boost stock markets, and some prefer a divided government.
Cryptocurrency and small-cap stocks rose in the run-up to the election.
Todd Morgan, president of Bel Air Investment Advisors, said Trump’s pledge to cut corporate taxes and reduce regulation could boost markets in the short term if he wins.
On the other hand, Trump promised to double trade tariffs, especially against China, and “eliminate all unspent funds” under the climate law signed by Biden-Harris that includes hundreds of billions of dollars in subsidies for electric cars, solar energy and others. Clean energy technologies.
A divided Congress may be the best outcome because it limits what the president can accomplish and spend, according to Brian Klimke, chief market strategist at Cetera Investment Management.
Here is a list of stocks and sectors that could move based on the election results:
Banks: A Trump win or Republican sweep could lift Wall Street banks like JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) thanks to improved local investing, looser regulation, local job additions and tax cuts, Bank Of America. Analysts said.
However, concerns about the wider trade deficit and tariffs are negative for the sector.
Beneficiaries of M&A include Goldman Sachs (GS), Morgan Stanley (MS), Lazard (LAZ), and Evercore (EVR) amid a more lenient approach to antitrust enforcement.
encryption: A more “receptive” regulatory approach to digital assets under a Trump win could benefit cryptocurrency stocks, according to TD Cowen analysts who highlighted the possibility of the former president appointing a pro-crypto SEC chief.
MicroStrategy (MSTR), Riot Platforms (RIOT), MARA Holdings (MARA), Hut 8 (HUT), and Bit Digital (BTBT) rose between 3.4% and 45% in October.
energyMorgan Stanley analysts believe a Trump presidency could prioritize reducing the regulatory burden on domestic oil and gas production, while considering the possibility of imposing more restrictive trade policies.
“Trump’s support for fossil fuel industries could benefit oil and gas stocks, as he is likely to pursue policies that favor domestic energy production,” said Daniella Hathorne, senior market analyst at Capital.com.
Trump could leverage his power to rapidly increase production levels, which would benefit exploration companies such as Chevron (CVX), ExxonMobil (XOM), and ConocoPhillips (COP).
It could also reverse the Biden administration’s pause on allowing new LNG export projects, which would likely benefit Baker Hughes and Chart Industries. However, Trump’s proposed 60% tariff on imports from China could hurt LNG exporters such as Cheniere Energy (LNG) and New Fortress Energy (NFE) if any retaliatory measures are taken.
Trump related stocksTrump Media and Technology Group (DJT), in which Trump has a majority stake, software company Phunware (PHUN) and video-sharing platform Rumble (RUM) are expected to see bigger gains if he wins. Phunware and Trump Media & Technology both doubled in value in October after sluggish performance in recent months.
Prison operatorsGeo Group (GEO) and CoreCivic (CXW) may benefit from Trump’s re-election, based on promises to crack down on illegal immigration and curbs on legal immigration, which could boost demand for detention centers.
TransportersWells Fargo analysts said proposed tariffs on Chinese imports under Trump’s term could hurt demand for package carriers FedEx (FDX) and United Parcel Service (UPS), and shipping company CH Robinson Worldwide (CHRW), which have significant exposure to China.
Small stocks: U.S.-focused companies can benefit from trade incentives and tariffs that favor domestic production. The Russell 2000 (RTY=F) small-cap index is up about 9% so far in 2024.
Home builders: Harris’ pledge to build more homes and cut costs for renters and homebuyers largely through tax incentives, coupled with a benign interest rate environment, could boost homebuilders DR Horton (DHI), KB Home (KBH), Lennar (LEN), PulteGroup (PHM), Zillow Group (Z) and Toll Brothers (TOL).
health care: The sector has been a major focus of Harris’ campaign.
It has pledged to lower health care costs by implementing caps on prescription drug prices, such as capping insulin prices at $35. This could impact the profit margins of pharmaceutical giants like Eli Lilly (LLY), Merck (MRK), and Pfizer (PFE).
However, Andrew Wells, IT director at SanJac Alpha, expects healthcare insurers like Humana (HUM) and UnitedHealth Group (UNH) will likely benefit from expanded coverage under a Harris presidency.
Corporate taxes: Harris’ proposal to tax corporations and the wealthy includes a 28% corporate tax rate that could help the US deficit.
According to Stock Analysis, Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOGL, GOOG) were the three companies that incurred the highest income taxes over the past 12 months, which amounted to a combined $67.73 billion.
“We are unlikely to see a blue wave, but if we do, the market may react temporarily negatively due to the potential for higher corporate tax rates,” Cetera’s Klimke said.
Renewable stocks: Green energy is expected to boom under Harris, with the potential for increased incentives and supportive policies as well as regulations imposed on major oil companies, according to Capital.com’s Hathorne.
Harris will aim to significantly reduce pollution by 2035, in line with the Paris Climate Agreement – a climate agreement that Trump has pledged to withdraw from.
Major US renewable energy companies such as NextEra Energy (NEE) and hydrogen producers including Plug Power (PLUG) and Bloom Energy (BE) could also benefit.
(Reporting by Ankika Biswas and Pranav Kashyap in Bengaluru; Editing by Sweta Singh and Devika Simnath)