Donald Trump’s Presidency Will Benefit Stocks in Almost Every Sector

Donald Trump’s Presidency Will Benefit Stocks in Almost Every Sector

Donald Trump’s Presidency Will Benefit Stocks in Almost Every Sector


After years of slowing earnings growth and little in the way of excitement for many Wall Street analysts, many are hopeful that President Elect Donald Trump will make things interesting.

When collating data for the Goldman Sachs Group Inc. (NYSE:GS) Analyst Index: a proprietary measure of growth across different sectors of the S&P 500, the firm included a question this month on what the election of Donald Trump will mean for the industries covered by those surveyed.

They are optimistic.

“This month, we asked analysts to comment on how the results of the US election will affect companies in their respective sectors,” the team wrote in the new note. “While their responses suggest that there is still uncertainty about the sector-level impact, the majority of sectors are anticipating favorable effects,” they say, adding that expectations of lower tax rates and economic stimulus are among Key reasons for the favorable outlook.

Goldman is not the first to hail the potential benefits of a Trump presidency. The Quantitative analysts at JPMorgan Chase (NYSE:JPM), also wrote that many of Donald Trump’s policies would be “pro-growth,” while uncertainty about specifics is high.

They wrote this week that if the campaign promises that have the potential to stimulate growth get implemented, the S&P 500 could see as much as $20 in additional EpS (earnings-per-share) growth over the next few years.

Still, “it is difficult to overstate just how wide the range of possible policy outcomes is currently,” they said. “While majority of President-elect Trump’s policies are pro-growth for equities, parts of his more populist rhetoric could significantly disrupt the economy,” they add, pointing to the promise of stricter trade policies. The strategists’ skepticism that all the former real-estate mogul’s campaign promises will go through means they stop short of incorporating the effects into their base-case earnings forecasts.

There is no suggestion that all industries will benefit alike.

Goldman’s analysts expect some to miss out, and some even to suffer under Donald Trump. Some respondents said they expected the election outcome to weigh negatively on their sectors; among those were autos, aerospace, clean energy, and agribusiness.

“Concerns regarding the outlook for business activity stem from potentially more restrictive trade policy, notably for clean energy and agricultural industries, and higher inflationary pressures,” according to the note.

While many of the Goldie’s analysts surveyed are optimistic, the firm’s Chief US Equity Strategist David Kostin sounded a note of caution.

In a separate report, his team moot the possibility that the “Hope” that has enveloped markets since the surprise election result could fade within months of the 45th President’s Inauguration.

“Fear is likely to pervade during 2-H and the S&P 500 will end Y 2017 at 2,300,” according to Mr. Kostin. While that would be 5% above where we are trading today, it would also mark a decline of nearly 5% from the 2,400 they expect the S&P 500 to be trading at during 1-H of the year.

Wednesday, the US  major stock market indexes finished at: DJIA +1.98 at 19123.58, NAS Comp -56.24 at 5323.68, S&P 500 -5.85 at 2198.81

Volume: Trade was heavy with about 1.6-B/shares exchanged hands in the NYSE

  • Russell 2000 +16.3% YTD
  • DJIA +9.8% YTD
  • S&P 500 +7.6% YTD
  • NAS Comp  +6.3% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.46) Bullish (0.33) Very Bullish (0.60) Bullish (0.44)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.19) Neutral (0.03) Bullish (0.39) Neutral (0.16)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (0.13) Neutral (0.09) Neutral (0.15) Neutral (0.17)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.38) Bearish (-0.40) Bearish (-0.42) Bearish (-0.33)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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