As the 2024 U.S. presidential election approaches, the race between Vice President Kamala Harris and former President Donald Trump is intensifying.

While the political landscape remains deeply polarized, the potential outcomes of this election have significant implications for various sectors, investors, and the economy at large.

This article delves into who stands to gain or lose with either candidate’s victory and examines the historical investment returns in the 12 months following presidential elections.

If Kamala Harris wins: 

Beneficiaries:

• Green Energy Sector: Harris has consistently supported policies aimed at combating climate change. Companies involved in renewable energy, electric vehicles, and environmental technologies could see substantial benefits from increased government funding and favorable regulations.
• Technology and Healthcare: Harris’s stance on modernizing infrastructure and expanding healthcare access could boost sectors like tech and pharmaceuticals. Her support for tech innovation may lead to more R&D incentives and grants.
• Social Justice Initiatives: Companies emphasizing diversity, equity, and inclusion (DEI) may find a supportive regulatory environment under a Harris administration.

Losers:

• Fossil Fuels: Firms in the oil, gas, and coal industries could face stricter regulations and reduced subsidies, potentially leading to higher operational costs.
• Big Corporations: Harris has advocated for increased corporate taxes and regulatory scrutiny, which might impact the profitability of large corporations.
• Defense Sector: A Harris administration might shift focus away from military expenditure toward social programs and renewable energy, potentially reducing contracts for defense companies.

If Donald Trump: wins:

Beneficiaries:

• Energy Sector: Trump’s policies have historically favored fossil fuel industries, pushing for energy independence and deregulation. Companies in oil, gas, and coal could benefit from a continuation of these policies.
• Financial Sector: Trump’s inclination towards deregulation could benefit banks and financial institutions by allowing more operational flexibility and reduced compliance costs.
• Defense Contractors: Trump’s emphasis on military strength and increased defense budgets could be advantageous for companies in the defense and aerospace sectors.

Losers:

• Renewable Energy: A potential rollback on environmental regulations and reduced funding for renewable energy projects could hinder the growth of this sector.
• Healthcare: Policies aimed at repealing or replacing the Affordable Care Act could create uncertainties for healthcare providers and insurers.
• Tech Giants: Increased scrutiny and potential regulatory actions against big tech firms could arise from concerns over monopolistic practices and data privacy issues.

Investment Returns Post-Election

History has shown that the stock market’s performance in the 12 months following a U.S. presidential election can vary widely, but certain trends can be observed:

General Trends:

• Market Volatility: Elections often lead to short-term market volatility as investors react to the potential policy changes of the incoming administration.
• Positive Returns: Historically, the S&P 500 tends to post positive returns in the year following an election, irrespective of which party wins. According to data from J.P. Morgan, the average return for the S&P 500 in the 12 months following presidential elections since 1928 is approximately 9.9%.

Specific Outcomes:

• Democratic Win (e.g., Harris): Historically, markets have performed well under Democratic administrations, with an average annual return of about 10.2% during the first year. This trend is attributed to the party’s focus on economic stimulus and infrastructure spending.
• Republican Win (e.g., Trump): The market also tends to respond positively to Republican victories due to pro-business policies and tax cuts, with an average annual return of around 9.6% in the first year.

Conclusion

The 2024 presidential election between Kamala Harris and Donald Trump presents starkly different potential outcomes for various sectors and investors. While Harris’s policies may benefit renewable energy, technology, and social justice initiatives, they could challenge fossil fuel industries and large corporations. Conversely, Trump’s policies may favor traditional energy, financial, and defense sectors but pose risks for renewable energy and healthcare reforms.

For investors, understanding these dynamics and historical market trends can provide valuable insights for portfolio adjustments. Regardless of the election outcome, maintaining a diversified portfolio and staying informed about policy changes will be crucial for navigating the post-election market landscape.