Biggest Winners and Losers in Wake of
Election (CXW, RGR)
When billionaire real estate mogul Donald
Trump clenched the election for President of the United States on Tuesday
night, markets around the world went into shock alongside millions of Americans
who had expected a victory by Hillary Clinton based on polling results. Due to
Trump's tendency to switch positions and widespread uncertainty about his
economic positions, markets saw his election as more difficult to predict
and, therefore, more volatile than Clinton's. After a quick nosedive,
however, it is clear that some areas of the market are looking up. Which
were hit hardest, and which may see immediate gains in the aftermath?
Rallies in Financial,
Energy Areas
Despite initial shock
at Trump's nomination that sent the Dow futures tumbling by nearly 800 points
and a drop of 5% in the S&P 500, by the middle of November 9th, markets had
in many cases leveled off. In fact, a few sectors managed to rally in the later hours of the
day. Financial and energy stocks generally saw gains, owing perhaps to investor
speculation that Trump may ease off on industry regulations in these areas.
Besides these areas, prison and biotech stocks saw gains as well. Corrections
Corporation of America (CXW)
closed 43% higher yesterday. While President
Obama had pledged to phase private prisons out
of use, many investors clearly expect Trump to change the country's course,
meaning a period of potential growth for the industry.
Clean Energy, Guns
Slump
While some sectors
rallied in the wake of Trump's victory, others saw investor hesitation creep in
almost immediately. Both clean energy and
gun stocks witnessed precipitous drops, as investors are uncertain about
prospects of those businesses after Trump assumes office. Sturm Ruger &
Co Inc (RGR)
closed 14% lower. Besides stocks, the Mexican peso also saw a decline
on the day, reflecting general concern about what Trump's trade plans may mean
for trade between the U.S. and its neighbor to the south. In the case of gun
stocks, which saw declines of 15% or more in some cases, drops in stock prices
might reflect a potential shift in sales; with customers concerned about the
possibility of stricter gun regulations under
a Hillary Clinton presidency, sales had been climbing in recent weeks, and
stock prices had joined them. Considering that Trump is likely to reduce regulations
regarding gun purchases, if anything, investors may be anticipating a decline
in sales in the short term.
Widespread market
volatility is common in the period immediately before and after a U.S.
presidential election. While these shifts tend to even out in the short term,
what remains to be determined is how the new policies and actions of an
incoming president will have longer lasting impacts on the economy in general
and businesses in particular.
