It was supposed to be chaos if Donald Trump was elected president. Hillary Clinton was the most market-friendly candidate. She was a known factor, while The Donald was seen as unpredictable. Analysts predicted the S&P 500 would drop 50 percent with a Trump victory, yet markets rose UP on Tuesday. How was everyone so wrong? And what can we expect moving forward?
Markets Surprise Everyone After Donald Trump Elected President; Here's What's Next
The entire world watched, most shocked, as Donald Trump somehow won the Oval Office and was determined the 45th President of the United States of America. Markets do not like uncertainty. S&P and Nasdaq futures fell 5 percent overnight. Markets in Japan followed suit. The world was unsure what to expect.
Then Wednesday’s trading happened, and the world didn’t end…
So why did stocks finish higher after everyone predicted the exact opposite?
To put it simply, everyone caught their breath, analyzed what had happened, and looked forward to what can come next with President Trump in office. Investors began digging into Trump’s promises and trading accordingly. The sectors which turned in the best performances of the day reflect the industries most likely to benefit under Trump.
For example, drugmakers. These companies would have come under heavy fire from a Clinton presidency, as Clinton has indicated the likelihood of price controls. Pfizer, Inc. (PFE) shares finished the day UP more than 7 percent and should continue seeing solid gains under the new administration.
On the other hand, hospital operators suffered the opposite effect. One of Trump’s main platforms was health care. Donald Trump promised to repeal the Affordable Care Act as his first act as president. HCA Holdings dropped like a rock, with shares falling 14 percent. But more than that, with Republicans holding not only the presidency but control of congress, as well, health care stocks should be worried, and investors should stay far away from buying any.
If President Trump comes through on his promises, investors can expect more infrastructure spending, tax cuts, and lighter regulation, all of which he says will benefit the economy. Investors should focus on the infrastructure spending. Construction stocks could be a major winner under Trump, with shares of Caterpillar (CAT) surging UP almost 8 percent. Domestic steel companies are a great bet here, too. United States Steel Corp. (X) rose another 17.18 percent Wednesday (though that could also be attested to a US probe of Chinese steel).
It seems former Rep.Art Laffer is right after all. Watch his interview in Fox business news to find out!
With the Dow up 257 points, the Nasdaq up 58 point, and the S&P up 23 points, investors should feel comfortable trading in what initially looks to be a bull market for the next four years – at least off of (very) first impressions. And while there may be a good amount of volatility, traders should plan to invest in banks, drugmakers, and industrial companies, as evidenced by some of the biggest movers on post-election Wednesday.
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