President-elect Donald Trump's policy agenda, from tariffs to deregulation, carries risks and rewards for different investment sectors, market experts said.
When Trump was elected in 2016, financials, industrials and energy outperformed the S&P 500 in the first week. However, for the remaining three years and 51 weeks, those same sectors significantly underperformed, Adam explained. For that reason, Raymond James ranks politics eighth for its potential impact on sectors. The seven factors that have more influence, according to the firm, are economic growth, fundamentals, monetary policy, interest rates and inflation, valuations, sentiment and corporate activity.
The whims of the housing market impact retailers, too: Home goods stores may not fare well if people aren't buying, renovating and decorating new homes, Cox said.That said, deregulation could be "absolutely huge" for the sector if it accelerates building timelines and reduces costs for developers, Goldberg said.Housing policies will be "one of the most-watched initiatives coming out of the next administration," Cox said.
Yet it remains to be seen whether that performance can continue under Trump, who has advocated for more oil, gas and coal production. The outlook for the sector could change if Trump acts on a campaign threat toIf Trump continues to make it easier to create more oil supply, that might not be a great thing for oil companies, according to Adam of Raymond James.
When Biden won in 2020, there was a lot of panic about the outlook for energy, oil and gas. In a third quarter letter that year, Cerasoli recalls writing, "I don't think it's going to be as bad as you think." Tax cuts may boost consumers' discretionary income, which would be a boon for companies selling consumer electronics, clothes, luxury goods and other items, Goldberg said.Retailers would likely pass on at least some of that additional cost to consumers, experts said.