My Urgent Election Debrief
Let’s skip right to what you came here for: the type of stocks to buy under Trump’s second term.
Many investors expect a Trump administration to have significant implications for the stock market and various sectors of the economy. Indeed, the markets are buzzing with certainty for the near-term, but is that accurate? And how will the long-term pan out?
In the near-term, stocks are projected to rise, potentially mirroring the 40% increase in the S&P 500 during Trump’s first term. This optimism is fueled by anticipated tax cuts, including a reduction in corporate tax rates, which could boost earnings per share (EPS) and stimulate economic growth.
While oil prices are expected to remain stable, inflation remains a wildcard under a Trump administration. The path of interest rates is uncertain, hinging on inflation trends. The market currently anticipates four rate cuts by the end of 2025, but this could change based on economic data in the early months of Trump’s administration.
The extent of stocks to buy under Trump will depend on inflation, interest rates, and valuation multiples. If inflation stays low and interest rates decrease, stock valuations could expand significantly. However, if inflation rises and interest rates remain high, stock upside may be limited.
Large-cap stocks are expected to outperform small caps, based on historical trends from Trump’s previous term…
Growth stocks, particularly in the technology sector, are anticipated to be the biggest winners…
“New-school” growth stocks, represented by disruptive tech startups, could see substantial gains, potentially outpacing their performance during Trump’s first term…
Clean tech stocks are expected to struggle under Trump due to the likely elimination of green-energy tax credits. However, nuclear energy stocks could surge as Republicans have adopted a pro-nuclear stance…
Financial stocks are projected to be strong stocks to buy under a Trump administration, benefiting from deregulation and stronger economic growth…
Real estate stocks may face challenges if interest rates and mortgage rates remain high, potentially freezing the housing market. The sector’s performance will largely depend on how Trump’s policies impact inflation and interest rates in the coming months…
Overall, the market implications of Trump’s victory suggest a period of economic growth and stock market gains, with particular sectors poised for significant outperformance.
However, do not take your eye off the ball now; you should remain vigilant about inflation and interest rate trends, as these factors will play a crucial role in shaping market dynamics during Trump’s presidency.
This brief video will answer the question on all of our minds.
This post originally appeared at InvestorPlace.
Category: Stocks
