Whether Hillary Clinton or Donald Trump wins the U.S. election this November, the question for investors is how that victory might affect the stock market.
If Clinton wins, will health care companies like Aetna prosper? If Trump wins, will oil companies like Exxon and Shell, surge?
Historically, the presidential election has had little long-term impact on the U.S. stock market. “The market responds more to Fed policy and economic conditions more than who is president,” said Sam Stovall, Chief Investment Strategist with CRFA.
Stovall looked at how the stock market has fared under past U.S. Presidents. Overall, markets from 1945 to 2016 gained 9.7% under Democrat presidents and 6.7% under Republican presidents, according to his findings. But it’s hard to say whether those gains were tied directly to the person sitting in the Oval Office.
Nonetheless, decisions the president makes can have lasting impacts on certain industries, which could have an impact on market value for publicly traded companies in those industries.
MagnifyMoney reached out to a handful of experts to find out how the market might look the day after Election Day (and beyond).
Here are their predictions:
If Trump wins …
Stovall noted there’s a lot of concern that a Trump victory would send the market into a nosedive. But any dip in the market would eventually level out. “If it falls, it won’t be for too long,” Stovall says.
Trump has vowed to cut regulations across many industries and let markets rule, which could lift markets if he is elected, says Jeff Auxier, president and CEO of Lake Oswego, Ore.-based Auxier Asset Management. “The perception is he would cut taxes and regulations,” he says.
For example, Trump has said that he will allow insurance companies to sell insurance across state lines, which could boost their business.
The insurance industry would particularly benefit from Trump’s insistence on deregulation, Auxier suggests. Lately, the U.S. government has worked to block a pair of potentially lucrative insurance mergers — marriages between Anthem-Cigna and Aetna-Humana. All signs point to less federal regulation under a Trump presidency.
Most large financial service companies favor a Trump triumph. “Banks favor less regulation,” Stovall says. Under a Clinton administration, some of the mega banks such as Bank of America and Citigroup would likely face pressure to shrink. In other words, they may be forced to sell off businesses and reduce total assets. If regulations under Trump declined, Capital One Financial Corp. (COF) and Discover Financial Services (DFS) stand to gain.
Another industry that might celebrate a Trump victory is construction and engineering.
“Any companies associated with building roads and bridges like engineering firms will benefit,” Auxier says. Some specific companies that could see revenues rise include Granite Construction (GVA) and Sherwin-Williams (SHW), the paint company. Stovall says these companies could do well under Clinton as well, who has said she would spike investment in infrastructure.
Large oil and energy companies would welcome a Trump victory since they prefer less regulation, a hallmark of the Republican agenda, Stovall adds.
For-profit colleges have been battered by regulations and would bounce back in a Trump presidency, Auxier suggests. Under Trump, companies such as Apollo Education Group and Lincoln Tech could “come back from the dead,” he says.
If Clinton wins …
If Clinton wins the election, renewable stocks would prosper and many health care stocks could do well. On the downside, biotech and retail stocks might falter.
Many retail stores and restaurants are concerned about a Clinton election, Stovall says. “Retail is worried about a $15 an hour minimum wage,” Stovall says, which Clinton has supported.
On health care, don’t expect much difference if Clinton is elected. “[A Clinton victory] is basically a continuation of the Obama administration,” Stovall says. “She represents more of the center of the two candidates and that would make for less uncertainty. Wall Street doesn’t like uncertainty.”
Despite that fact that Aetna cut back its Affordable Health Care coverage in 11 states, and Humana and UnitedHealthCare also reduced coverage, the Obama administration has noted that millions of people still maintain their health plans. Health care companies can opt out of offering coverage and then return, so it’s not necessarily a permanent trend.
Under a Clinton administration, large managed health care firms, HCA Holdings (HCA), Tenet Healthcare Corp. (THC), and Molina Healthcare (MOH) could prosper as more companies drop out of the marketplace, creating less competition.
But Stovall also notes that Clinton has focused on capping the rising cost of drugs, which could trouble the pharmaceutical industry.
If Clinton wins, “biotech will shake in their boots,” Stovall adds. Clinton has stressed that controlling drug prices and avoiding massive price hikes is critical. She has said she will look to regulate and curtail pharmaceutical price increases, specifically highlighting the recent controversy over Mylan’s decision to drastically increase the price of EpiPens.
“Biotech and pharma companies would likely suffer from promised price caps. However, hospital management companies will prosper since we won’t be back to the old pattern of uninsured individuals using emergency rooms as their primary care facilities,” Stovall asserts.
While a Trump victory could likely be good news for oil stocks, a Clinton victory could send renewable energy stocks soaring.
“Democrats would be pushing for renewable energy and putting more restraints on energy,” Stovall says. Hillary Clinton has supported President Obama’s Clean Power Plan, which intends to set a national limit on carbon pollution, and she has stated that “the Obama plan is a major step forward to combat climate change.”