Stock Markets Analysis and Opinion

Trump or Biden? Here’s How to Play Each of the US Election Scenarios

2024.07.10 08:29

  • The US is set to vote later this year and different sectors could benefit depending on the winner’s policies.
  • Let’s take a look at some stocks that would benefit and some that would be hurt by a Trump victory.
  • And we will also do the same for a Joe Biden victory scenario.
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With the 2024 US presidential elections approaching on November 5, the political landscape is heating up. The results may take several days to confirm, particularly if the vote margins are narrow. Congress will certify the results on January 6, 2025, and the president-elect will take office on January 20.

Before election day, the Republican convention will be held from July 15-18, followed by the Democratic convention from August 19-22. The presidential debates are set for September 16 in San Marcos, Texas, October 1 in Petersburg, Virginia, and October 9 in Salt Lake City, Utah. The vice presidential debate is scheduled for September 25 in Easton, Pennsylvania.

The recent debate has dimmed Biden’s chances of victory, leading to speculation that the Democrats might consider another candidate. Meanwhile, Trump appears to have an edge for now.

How Could Markets React to Both Scenarios?

Historically, the index’s performance three months before the election has been an indicator of the outcome. An increase generally favors the incumbent, while a decrease benefits the challenger, a pattern that has held true 87% of the time since 1920. Similarly, the dollar’s strength can offer clues: a strong dollar typically favors the incumbent party, while a weak dollar benefits the opposition.

A Trump victory could bolster the due to his protectionist stance, including a proposed 10% tariff on imports. However, retaliatory tariffs from other countries could mitigate this effect.

So considering the above, here’s how stocks could react in both scenarios:

Trump Win Scenario

Trump has promised to cut corporate taxes by lowering them from 21% to 20% while making the 2017 Republican tax law permanent. He also intends to impose a 10% across-the-board tariff and higher tariffs on products made in China.

Stocks to Monitor If Trump Wins:

1. Cheniere Energy

Cheniere Energy (NYSE:) is the largest exporter of liquefied (LNG) in the United States.

The company has increased its quarterly dividend to $0.435 per share, which it will distribute on August 16, and has a yield of 1.02%. It is also pursuing an ambitious share buyback program through 2027 showing its confidence in the future.

On August 1 it presents its results and for the second quarter earnings per share of $1.74 per share are expected and the estimate for the full year would be earnings per share of $8.33 per share.

The company could benefit from Trump’s promises to reverse regulations and speed up approvals for LNG exports.

It presents 18 ratings, of which 15 are buy, 3 are hold and none are sell.

The potential the market sees for it would be in the $200 range.

2. General Motors

General Motors Company (NYSE:) pays out $0.12 per share as a dividend each quarter with an annual yield of 1.05%. It will also repurchase $6 billion worth of shares to increase shareholder value.

Its first-quarter results were US$2.98 billion in net income, an increase of 24.4%. On July 23 it presents its next results, with EPS expected to increase by 56.22% and net income of between $10.1 billion and $11.5 billion for the year.

The carmaker could benefit from tariffs aimed at boosting U.S. manufacturers.

It has 13 ratings, of which 7 are buy, 6 are hold and none are sell.

The average market price target stands at $57.

3. Nucor Corporation

Nucor (NYSE:) is one of the big players in the U.S. steel sector. Its quarterly dividend is $0.54 per share with an annual yield of 1.40%. In addition, it has increased the dividend for 50 consecutive years.

On July 22 it will present its accounts and is expected to earn $2.30 per share in the second quarter along with revenues of $7.7 billion (for the year $31.1 billion).

It could benefit from Trump’s tariffs in defense of domestic manufacturers. It presents 11 ratings, of which 5 are buy, 6 are hold and none are sell.

The average market price target stands at $190.56.

, , and traditional energy companies stand to benefit from Trump’s pro-oil policies with his pledge to reverse restrictions on crude oil’s domestic production. Considering that, the following stocks could gain if Trump gets elected:

  • Baker Hughes
  • Exxon Mobil (NYSE:)
  • ConocoPhillips (NYSE:)
  • Occidental Petroleum (NYSE:)
  • Halliburton (NYSE:)
  • Devon Energy (NYSE:)
  • Chevron (NYSE:)

Stocks to Avoid:

Meanwhile, defense companies would also be favored by forecasts in military spending. Here are some notable stocks in the sector:

  • Lockheed Martin (NYSE:)
  • Northrop Grumman (NYSE:)
  • Rtx Corp (NYSE:)

Conversely, companies with greater exposure to China could be hurt.

  • Nvidia (NASDAQ:)
  • Broadcom (NASDAQ:)
  • Qualcomm (NASDAQ:)
  • Air Products (NYSE:) &Chemicals
  • Celanese (NYSE:)
  • BorgWarner (NYSE:)
  • Otis Worldwide (NYSE:)

It also seeks to kill Biden’s electric vehicle policy and buyer tax credits. Affected would be:

  • Tesla (NASDAQ:)
  • Rivian Automotive (NASDAQ:)
  • Lucid Group (NASDAQ:)

Biden Win Scenario

Investors are closely watching sectors likely to be impacted by a Biden victory, with the clean energy and electric vehicle markets set to gain, while financial stocks may face headwinds due to regulatory pressures.

Stocks to Watch if Biden Wins:

Here are the clean energy stocks to put on your watchlist if Biden wins:

  • ChargePoint Holdings (NYSE:)
  • Beam Global (NASDAQ:)

The solar energy sector would also benefit. Here are the stocks to watch:

  • First Solar (NASDAQ:)
  • Sunrun (NASDAQ:)
  • Enphase Energy (NASDAQ:)

Stocks to Avoid:

Financial stocks, on the other hand, could be hurt by a Democratic victory, as they are expected to maintain regulations and higher capital requirements. Of note:

  • Bank of America (NYSE:)
  • JPMorgan Chase (NYSE:)
  • Goldman Sachs (NYSE:)

***

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.



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