Wall Street makes wagers on the likely winners and losers in a second Trump term

NEW YORK (news agencies) — Wall Street is already making big bets on what take two for a White House led by Donald Trump will mean for the economy.

Since Election Day, investors have sent prices zooming for stocks of banks, fossil-fuel producers and other companies expected to benefit from Trump’s preference for lower tax rates and lighter regulation. For retailers, meanwhile, the outlook is murkier because of uncertainty about whether they’ll be able to absorb any of the higher costs created by tariffs.

Professional investors are warning about the risk of getting carried away by the momentum. While strong rhetoric on the campaign trail can cause these big swings, not all of the promises turn into actual policy. Plus, the broad U.S. stock market tends to move more on long-term growth in profits than anything else.

— Stan Choe

Here’s a look at where Wall Street is placing its bets at the moment:

Technology stocks soared in Trump’s first term, helped by the administration’s tax policies. But the relationship was tempestuous: Trump’s immigration stance threatened a source of high-skilled immigrants that comprises a significant part of the industry’s work force and his trade wars threatened international sales and supply chains.

This time around, tech could benefit from an anticipated loosening of antitrust regulation that discouraged big deals from getting done and threatened to rein in the power of Google, Apple and Amazon. What’s more, Trump is expected to clear the way for Big Tech to make more inroads in artificial intelligence technology — an area increasingly seen as a crucial battleground in the duel for global power between the U.S. and China.

Trump’s vow to impose tariffs and other restrictions on trade does pose a potential downside for chip makers, particularly stock market darling Nvidia. A possible rollback of Biden administration efforts to boost U.S. semiconductor production also is a concern.

Still, in a sign of tech’s more conciliatory attitude, Trump’s election was greeted by congratulatory posts from most of the industry’s luminaries, including Apple CEO Tim Cook, Amazon CEO Andy Jassy and Google CEO Sundar Pichai.

— Michael Liedtke

Trump’s victory brings a big dose of uncertainty for the retail industry.

Trump has proposed extending 2017 tax cuts for individuals and restoring tax breaks for businesses that were being reduced. He also wants to further cut the corporate tax rate. Those would be tailwinds for shoppers and businesses, analysts said.

But the president-elect’s trade proposals could have a huge downside. He’s proposed 60% tariffs on Chinese goods and tariffs of 10% to 20% on other imports. Neil Saunders, managing director of GlobalData, a research firm, said retailers would either take a big hit on profits or be forced to increase prices.

As opposed to 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 been diversifying their sourcing away from China. Shoe brand Steve Madden says it plans to cut imports from China by as much as 45% next year.

The National Retail Federation is forecasting higher prices for U.S. shoppers if Trump’s new tariffs are implemented. For example, an $80 pair of men’s jeans would cost $90 to $96.

— Anne D’Innocenzio

Trump has said he wants to “drill, drill, drill” starting on Day 1 of his presidency, so it’s expected that traditional fossil fuel-focused companies will get a boost and renewable energy outfits could be disadvantaged.

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, such as 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 remember Trump’s first term, says Austin Pickle, investment strategy analyst at Wells Fargo Investment Institute. The thought back then, like now, was that Trump would boost prices for oil-and-gas stocks. But energy stocks ended up struggling late in his term when the price of oil briefly went below zero during the COVID-19 pandemic.