Stocks to watch as White House race enters final stretch (updated)

Phunware

01/11/2024 15:00

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    By Ankika Biswas, Pranav Kashyap
       Nov 1 (Reuters) - Just days ahead of the Nov. 5
presidential election in the U.S., investors are trying to gauge
how stock markets will react as polls and betting platforms
point to a tight race between Vice President Kamala Harris and
former President Donald Trump. 
    Harris' lead over the Republican has dwindled to a single
percentage point in the final stretch of the presidential
contest, according to a Reuters/Ipsos poll published on
Tuesday. 
A majority of a dozen analysts that Reuters spoke to expect a
Trump return to boost equity markets, with some favoring a split
government.
    Crypto stocks
     and small-caps have gained in the lead up to the election.
  
    Trump's pledge to cut corporate taxes and decrease
regulations could boost markets in the short-term if he wins,
said Bel Air Investment Advisors Chairman Todd Morgan.
  
     On the other hand, Trump has promised to 
    double down on trade tariffs
    , especially against China, and "
    rescind
     all unspent funds" under a signature Biden-Harris climate
law that includes hundreds of billions of dollars in subsidies
for electric vehicles, solar and other clean energy
technologies.
  
    A divided Congress may be the best outcome as it limits what
the president can accomplish and spend, according to Brian
Klimke, chief market strategist at Cetera Investment Management.
     
    Here's a list of stocks and sectors that could move on the
election outcome:
     
    TRUMP TRADE
  
     
  
BANKS: A Trump win or Republican sweep could lift Wall Street
banks such as JPMorgan Chase  JPM.N , Bank of America  BAC.N 
and Wells Fargo  WFC.N  on improved domestic investment, looser
regulations, domestic job additions and tax cuts, Bank of
America analysts said. 
However, concerns around a wider trade deficit and tariffs are
viewed as negative for the sector.
M&A beneficiaries include Goldman Sachs  GS.N , Morgan Stanley
 MS.N , Lazard  LAZ.N  and Evercore  EVR.N  amid a more lenient
approach to antitrust regulation enforcement. 
     
CRYPTO: A more "receptive" regulatory approach to digital assets
under a Trump win could benefit crypto stocks, according to TD
Cowen analysts who highlighted the likelihood of the former
president naming a pro-crypto SEC chair.
MicroStrategy  MSTR.O , Riot Platforms  RIOT.O , MARA Holdings
 MARA.O , Hut 8  HUT.O  and Bit Digital  BTBT.O  climbed between
3.4% and 45% in October.
     
ENERGY: Morgan Stanley analysts believe a Trump presidency could
prioritize reducing the regulatory burden on domestic oil and
gas production, while considering the possibility of more
restrictive trade policies.
    "Trump's support for fossil fuel industries could benefit
oil and gas stocks, as he would likely pursue policies that
favor domestic energy production," said Daniela Hathorn, senior
market analyst at Capital.com.
    Trump could leverage authority to rapidly increase
production levels, which would benefit exploration companies
such as Chevron  CVX.N , Exxon Mobil  XOM.N , and ConocoPhillips
 COP.N .
    He could also reverse the Biden administration's pause on
permitting new LNG export projects, likely benefiting Baker
Hughes  BKR.N  and Chart Industries  GTLS.N . However, Trump's
proposed 60% tariff on imports from China could hit LNG
exporters like Cheniere Energy  LNG.N  and New Fortress Energy
 NFE.O  in case of any retaliatory actions.
     
TRUMP-RELATED STOCKS: Trump Media & Technology Group  DJT.O , in
which Trump owns a majority stake, software firm Phunware
 PHUN.O  and video-sharing platform Rumble  RUM.O  stand to gain
further if he wins. Both Phunware and Trump Media & Technology
have doubled in October after sluggish performance in recent
months. 
     
    PRISON OPERATORS: Geo Group  GEO.N  and CoreCivic  CXW.N 
may benefit from Trump's re-election, on promises of a crackdown
on illegal immigration and restrictions on legal immigration,
which could boost demand for detention centers.
     
CARRIERS: Wells Fargo analysts said the proposed tariff on
Chinese imports under a Trump term could hurt demand for parcel
carriers FedEx  FDX.N  and United Parcel Service  UPS.N , and
forwarder C.H. Robinson Worldwide  CHRW.O , which have
substantial exposure to China. 
     
SMALL-CAP STOCKS: U.S.-focused companies could benefit from
business incentives and tariffs that favor domestic production.
The small-cap Russell 2000 index  .RUT  has risen nearly 9% so
far in 2024.
     
    HARRIS BASKET 
  
     
HOMEBUILDERS: Harris' pledge to build more homes and reduce
costs for renters and home buyers largely through tax
incentives, coupled with a benign interest-rate environment,
could boost homebuilders D.R. Horton  DHI.N , KB Home  KBH.N ,
Lennar  LEN.N , PulteGroup  PHM.N , Zillow Group  ZG.O  and Toll
Brothers  TOL.N .  
        
HEALTHCARE: The sector has been a key focus for the Harris
campaign. 
She has pledged to cut healthcare costs by implementing caps on
prescription drug prices, such as limiting insulin prices to
$35. This could weigh on profit margins for pharmaceutical
giants such as Eli Lilly  LLY.N , Merck  MRK.N , and Pfizer
 PFE.N . 
Andrew Wells, CIO of SanJac Alpha, however, expects healthcare
insurers such as Humana  HUM.N  and UnitedHealth Group  UNH.N 
to 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 and that could help
the U.S. deficit. 
According to Stock Analysis, Microsoft  MSFT.O , Apple  AAPL.O ,
and Alphabet  GOOGL.O  were the three firms shouldering the
highest income taxes over the past 12 months, collectively
amounting to $67.73 billion. 
    "It is highly unlikely to see a blue wave, but if that
happens, the market reaction could be temporarily negative due
to the prospects of higher corporate tax rates," said Cetera's
Klimke.         
     
RENEWABLE STOCKS: Green energy is poised to thrive under Harris,
with the potential for increased incentives and supportive
policies as well as regulations on big oil firms, according to
Capital.com's Hathorn. 
Harris will aim to significantly reduce pollution by 2035,
aligning with the Paris Agreement — a climate pact Trump has
vowed to withdraw.
Major U.S. renewable energy firms such as NextEra Energy  NEE.N 
and hydrogen producers including Plug Power  PLUG.N  and Bloom
Energy  BE.N  could also benefit.

(Reporting by Ankika Biswas and Pranav Kashyap in Bengaluru;
Editing by Sweta Singh and Devika Syamnath)
((mailto:Ankika.Biswas@thomsonreuters.com;))