Market Braces for Impact as Trump’s Second Term Takes Off
As President-elect Donald Trump’s second term begins, investors are preparing for a wild ride. With promises of lighter regulation and tax cuts, Wall Street is optimistic, and the S&P 500 has seen its best weekly performance since the election, climbing 3.6% since November 5. However, some areas of the market may be at risk due to Trump’s unpredictable approach, which is expected to trigger market volatility.
Financials: A Top Trade
Financials are viewed as a top trade, with investors betting on looser regulation and increased M&A activity. The nation’s largest banks have reported a surge in corporate profits, and CEOs are expressing confidence in the economy. “It feels like we have a tailwind going into 2025,” said Goldman Sachs CEO David Solomon. JPMorgan CFO Jeremy Barnum cited a “significant amount of increase of optimism in the overall environment,” adding that “we’re in an animal-spirits moment right now.”
Industrial Sector Gains Confidence
The industrial sector is gaining confidence, with several companies expecting better growth in 2025. HEICO co-president Eric Mendelson sees Trump’s policies boosting investor confidence, creating a “very positive environment” for the sector. Elon Musk’s influence on the incoming administration could also be a catalyst for the sector.
Aerospace and Air Transportation
Industry leaders expect the incoming administration to create a supportive backdrop for the aerospace and air transportation sector, with plans to scale back consumer protection initiatives and reduce regulations affecting the commercial space and advanced air mobility industries.
Big Tech Cozies Up to Trump
Big Tech leaders are cozying up to President-elect Trump due to his plans to peel back regulations and invest heavily in AI. Wedbush’s Dan Ives expects the technology sector to be a big winner this year, predicting a “Goldilocks” scenario for Big Tech.
Automotive Sector at Risk
Plans to roll back EV policies and threats of tariffs pose a risk to the automotive sector. Tom Donnelly, president and CEO of Mazda North American Operations, says it’s “potentially” more difficult to do business under Trump given the unpredictability surrounding his administration and the potential for more tariffs.
Discount Retailers and Construction
Discount retailers are among the stocks most at risk of tariffs, as they rely heavily on Chinese imports. The construction industry is also at risk, with Trump’s promise of mass deportations and tariffs potentially increasing costs for materials and labor.
As the market navigates the uncertainty of Trump’s second term, investors will be watching closely to see how these sectors are impacted. One thing is certain: it’s going to be a bumpy ride.
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