Stocks to watch as White House race enters final stretch
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By Ankika Biswas, Pranav Kashyap
Nov 1 (Reuters) -Just days ahead of the Nov. 5 presidential election in the U.S.,investors are trying to gauge how stock markets will reactas polls and betting platforms point to a tight race between Vice President Kamala Harris and former President Donald Trump.
Harris' lead over the Republican has dwindled to a single percentage point in the final stretch of the presidential contest, according to a Reuters/Ipsos poll published on Tuesday.
A majority of a dozen analysts that Reuters spoke to expect a Trump returnto boost equity markets, with some favoringa split government.
Crypto stocks and small-caps have gained in the lead up to the election.
Trump's pledge to cut corporate taxes and decrease regulations could boost markets in the short-term if he wins, said Bel Air Investment Advisors Chairman Todd Morgan.
On the other hand, Trump has promised to double down on trade tariffs , especially against China, and " rescind all unspent funds" under a signature Biden-Harris climate law that includes hundreds of billions of dollars in subsidies for electric vehicles, solar and other clean energy technologies.
A divided Congress may be the best outcome as it limits what the president can accomplish and spend, according to Brian Klimke, chief market strategist at Cetera Investment Management.
Here's a list of stocks and sectors that could move on the election outcome:
TRUMP TRADE
BANKS: A Trump win or Republican sweep could lift Wall Street banks such as JPMorgan Chase JPM.N, Bank of America BAC.N and Wells Fargo WFC.N on improved domestic investment,looser regulations, domestic job additions and tax cuts, Bank of America analysts said.
However, concerns around a wider tradedeficit and tariffs are viewed as negative for the sector.
M&A beneficiaries include Goldman Sachs GS.N, Morgan Stanley MS.N, Lazard LAZ.N and Evercore EVR.N amid a more lenient approach to antitrust regulation enforcement.
CRYPTO: A more "receptive" regulatory approach to digital assets under a Trump win could benefit crypto stocks, according to TD Cowen analysts who highlighted the likelihood of the former presidentnaming a pro-crypto SEC chair.
MicroStrategy MSTR.O, Riot Platforms RIOT.O, MARA Holdings MARA.O, Hut 8 HUT.O and Bit Digital BTBT.O climbedbetween 3.4% and 45% in October.
ENERGY: Morgan Stanley analysts believe a Trump presidency could prioritize reducing the regulatory burden on domestic oil and gas production, while considering the possibility of morerestrictive trade policies.
"Trump's support for fossil fuel industries could benefit oil and gas stocks, as he would likely pursue policies that favor domestic energy production," said Daniela Hathorn, senior market analyst at Capital.com.
Trump could leverage authority to rapidly increase production levels, which would benefit exploration companies such as Chevron CVX.N, Exxon Mobil XOM.N, and ConocoPhillips COP.N.
Hecould also reverse the Biden administration's pause on permitting new LNG export projects, likely benefiting Baker Hughes BKR.N and Chart Industries GTLS.N. However, Trump'sproposed 60% tariff on imports from China could hit LNG exporters like Cheniere Energy LNG.N and New Fortress Energy NFE.O in case of any retaliatory actions.
TRUMP-RELATED STOCKS: Trump Media & Technology Group DJT.O, in which Trump owns a majority stake, software firm Phunware PHUN.O and video-sharing platform Rumble RUM.O stand togain further if he wins. Both Phunware and Trump Media & Technology have doubled in October after sluggish performance in recent months.
PRISON OPERATORS: Geo Group GEO.N and CoreCivic CXW.N may benefit from Trump's re-election, on promises of a crackdown on illegal immigration and restrictions on legal immigration, which could boost demand for detention centers.
CARRIERS: Wells Fargo analysts said theproposed tariff on Chinese imports under a Trump term could hurt demand forparcel carriers FedEx FDX.N and United Parcel Service UPS.N, and forwarder C.H. Robinson Worldwide CHRW.O, which have substantial exposure to China.
SMALL-CAP STOCKS: U.S.-focused companies could benefit from business incentives and tariffs that favor domestic production. The small-cap Russell 2000 index .RUT has risen nearly 9% so far in 2024.
HARRIS BASKET
HOMEBUILDERS: Harris' pledge to build more homes and reduce costs for renters and home buyers largely through tax incentives, coupled with a benign interest-rate environment, could boost homebuilders D.R. Horton DHI.N, KB Home KBH.N, Lennar LEN.N, PulteGroup PHM.N, Zillow Group ZG.O and Toll Brothers TOL.N.
HEALTHCARE: The sector has been a key focus for the Harris campaign.
She has pledged to cut healthcare costs by implementing caps on prescription drug prices, such as limiting insulin prices to $35. This could weigh on profit margins for pharmaceutical giants such as Eli Lilly LLY.N, Merck MRK.N, and Pfizer PFE.N.
Andrew Wells, CIO of SanJac Alpha, however, expects healthcareinsurers such as Humana HUM.N and UnitedHealth Group UNH.N to likely benefit from expanded coverage under a Harris presidency.
CORPORATE TAXES: Harris' proposal to tax corporations and the wealthy includes a 28% corporate tax rate and that could help the U.S. deficit.
According to Stock Analysis, Microsoft MSFT.O, Apple AAPL.O, and Alphabet GOOGL.O were the threefirms shouldering the highest income taxes over the past 12 months, collectively amounting to$67.73 billion.
"It is highly unlikely to see a blue wave, but if that happens, the market reaction could be temporarily negative due to the prospects of higher corporate tax rates," said Cetera's Klimke.
RENEWABLE STOCKS: Green energy is poised to thrive under Harris, with the potential for increased incentives and supportive policies as well as regulations on big oil firms, according to Capital.com's Hathorn.
Harris will aim to significantly reduce pollution by 2035, aligning with the Paris Agreement — a climatepact Trump hasvowed to withdraw.
Major U.S. renewable energy firms such asNextEra Energy NEE.N and hydrogen producers includingPlug Power PLUG.N and Bloom Energy BE.N could also benefit.
Reporting by Ankika Biswas and Pranav Kashyap in Bengaluru; Editing by Sweta Singh and Devika Syamnath
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