NEW YORK (AP) — Wall Street is already making big bets on what taking two for a White House led by Donald Trump will mean for the economy.
Since Election Day, investors have driven up prices for shares of banks, fossil fuel producers and other companies expected to benefit from Trump’s preference for lower tax rates and lighter regulations. For retailers, the outlook is bleaker due to uncertainty over whether they will be able to absorb the higher costs resulting from tariffs.
Professional investors warn against the risk of getting carried away by the momentum. While strong rhetoric during the campaign can cause these big swings, not all promises translate into actual policy. Furthermore, the broad US stock market tends to be driven more by long-term earnings growth than anything else.
– Stan Choe
Here’s a look at where Wall Street is placing its bets right now:
Technology
Technology stocks soared during Trump’s first term, helped by the administration’s tax policies. But the relationship has been tempestuous: Trump’s immigration policies threatened a source of highly skilled immigrants who make up a significant portion of the industry’s workforce, and his trade wars threatened international sales and supply chains.
This time, tech could benefit from an expected relaxation of antitrust regulations, which have discouraged big deals from getting done and threatened to rein in the power of Google, Apple and Amazon. Moreover, Trump is expected to pave the way for Big Tech to gain more ground in artificial intelligence technology – an area increasingly seen as a crucial battleground in the US-China battle for global power.
Trump’s promise to impose tariffs and other trade restrictions poses a potential disadvantage for chip makers, especially stock market favorite Nvidia. A possible rollback of the Biden administration’s efforts to boost U.S. semiconductor manufacturing is also a concern.
Still, in a sign of technology’s more conciliatory stance, Trump’s election was greeted with congratulations from most industry luminaries, including Apple CEO Tim Cook, Amazon CEO Andy Jassy and Google CEO Sundar Pichai.
– Michael Liedtke
Retail
Trump’s victory brings a large dose of uncertainty for the retail sector.
Trump has proposed extending the 2017 tax cuts for individuals and restoring tax breaks for businesses that were cut. He also wants to further reduce corporate taxes. That would be a tailwind for shoppers and businesses, analysts said.
But the president-elect’s trade proposals could have a major downside. He has proposed tariffs of 60% on Chinese goods and tariffs of 10% to 20% on other imports. Neil Saunders, managing director of research firm GlobalData, said retailers would either take a big hit to profits or be forced to raise prices.
Unlike Trump’s first term, retailers will have a harder time absorbing tariffs this time because their costs of doing business are already higher, Saunders said.
Many companies, including Nike and eyewear retailer Warby Parker, have diversified their sourcing outside of China. Footwear brand Steve Madden says it plans to cut imports from China by as much as 45% next year.
The National Retail Federation predicts higher prices for American consumers if Trump’s new tariffs are implemented. For example, an $80 pair of men’s jeans costs $90 to $96.
—Anne D’Innocenzio
Energy
Trump has said he wants to “drill, drill, drill” from Day 1 of his presidency. So traditional fossil fuel-focused companies are expected to get a boost and renewable energy companies could be put at a disadvantage.
Oilfield services companies, including Haliburton and Schlumberger, would likely benefit from initiatives to expand drilling in the Gulf of Mexico and Alaska. Natural gas companies, including EQT and CNX Resources, could benefit from facilities and pipeline projects. Meanwhile, clean energy companies like First Solar and many electric vehicle makers could have a harder time growing if Trump cuts tax credits and other incentives for the industry.
But consider Trump’s first term, says Austin Pickle, an investment strategy analyst at the Wells Fargo Investment Institute. The thought then, as now, was that Trump would raise oil and gas stock prices. But energy stocks suffered late in his tenure when oil prices briefly fell below zero during the COVID-19 pandemic.
—Damiaan Troise
Healthcare
Drugmakers, insurers and other healthcare companies could benefit from fewer regulatory roadblocks to mergers and an overall lighter regulatory stance.
Insurers in particular can expect some regulatory relief for Medicare Advantage plans, which are private versions of the government’s Medicare program primarily for people 65 and older. Under Democratic leadership, some insurers faced smaller bonus payments tied to their Medicare Advantage plans. Some drugmakers are facing revenue declines for certain drugs covered by Medicare. These challenges could diminish under Republican rule, Morningstar analysts noted.
A second Trump administration could also challenge healthcare companies.
The approval of drugs and vaccines could become less predictable depending on the role that anti-vaccine activist Robert F. Kennedy Jr. plays. plays, says Morningstar analyst Karen Andersen.
Health insurers that sell coverage on the Affordable Care Act’s insurance marketplaces or administer state and federally funded Medicaid coverage could face challenges as Republicans try to dismantle parts of the law, says Julie Utterback of Morningstar.
Notably, the additional subsidies that help people buy marketplace coverage will expire at the end of next year, which could lead to a drop in enrollment.
—Tom Murphy
Cars
The auto industry is another industry that should welcome less restrictive regulations but fear tariffs.
Trump is likely to roll back or eliminate tailpipe emissions limits for 2027 through 2032 imposed by the Biden administration. Companies like General Motors, Ford and Stellantis would be able to more easily sell larger, less efficient vehicles without paying hefty fines.
Companies would also face less pressure to sell more electric vehicles to offset emissions from large trucks and SUVs, which enjoy large profit margins, said Kevin Tynan, research director at The Presidio Group.
Rates are a different story. Trump has threatened tariffs on imported vehicles to force more production in the US. The threat of 100% tariffs on imported vehicles from Mexico is a major concern.
Morningstar analyst David Whiston said such tariffs could potentially cost General Motors, Stellantis and Ford billions in profits. About 30% of GM’s North American production comes from Mexico, while this is 24% for Stellantis and about 15% for Ford.
Whiston noted that tariffs on Mexican-built vehicles would violate the U.S.-Mexico-Canada Free Trade Agreement negotiated during Trump’s first term. But that could be reworked in July 2026. Whiston said these tariffs would mean higher prices and that many buyers already can’t afford the current average price of more than $47,000.
Trump has also threatened to eliminate electric vehicle tax breaks that have boosted electric vehicle sales.
–Tom Krisher
Banks
Bank stocks could benefit if Trump’s policies stimulate the US economy and more customers apply for loans. In addition, Wells Fargo banking analyst Mike Mayo believes Trump’s victory could usher in a “new era” of lighter financial regulation, after 15 years of tighter scrutiny following the 2008-2009 financial crisis. Under Biden, banks faced demands to set aside more capital to reduce risks, but the Trump administration is likely to take a step back.
Dealmaking could see an uptick under Trump, which could help banks with large investment banking operations such as Morgan Stanley and Goldman Sachs. That also increases the chances that the upcoming merger between Capital One Financial and Discover Financial will receive federal approval. Regional banks should benefit as a growing economy prompts the creation of new small businesses or the expansion of existing ones.
—Paul Harloff
Building materials and construction
Construction companies are looking at a mixed bag, with lighter regulations a plus but higher material costs a potential minus.
Construction companies, including homebuilders KB Home and PulteGroup, could benefit from tax breaks and friendlier regulations. A surge in development could help ease pressure on the housing market, which has been under pressure from a lack of supply of new homes. A boost in the construction sector could also help suppliers of raw materials, including steel and concrete aggregates.
But the potential for across-the-board commodity price increases is a threat. Higher costs could hurt the profits of construction companies and home builders. Steel tariffs could help protect U.S. producers from competition, but a resulting rise in global prices could wipe out that benefit while putting pressure on construction companies.
Plans for an immigration crackdown could worsen existing labor shortages and lead to project delays.
—Damiaan Troise
Crypto
Trump, once a crypto skeptic, has promised to make the US “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. Since he won, money has poured into crypto assets. Bitcoin, the largest cryptocurrency, has risen above $86,000. Shares of crypto platform Coinbase have risen more than 60% since the election.
Crypto industry players welcomed Trump’s victory, hoping he would implement regulatory changes they have long lobbied for. And Trump had promised that, if elected, he would fire Securities and Exchange Commission Chairman Gary Gensler. This has led the US government’s crackdown on the crypto industry and has repeatedly called for greater oversight.
—Wyatte Grantham-Phillips
