US Election Day Plays: Stocks and Sectors Likely to Benefit from A Trump or Harris Win

If you haven’t cast your ballot yet, visit your local polling place to secure your vote, an American right that was secured for you in 1776.

Today voters hit the polls to cast their ballot for America’s next President that will likely either be Republican candidate and former President, Donald Trump or Democratic candidate and the current administration’s Vice President, Kamala Harris. As uncertainties swirl surrounding future promised potential policies, additional uncertainty surrounds the outcome and the potential impact on markets.

Historically, U.S. stocks have averaged a 9.1% return in election years, based on data spanning 74 years and encompassing numerous administrations and congressional shifts, according to Fidelity. In previous election years, when the market has produced strong returns from January – October, that trend historically has held. The S&P, Nasdaq and Dow have returned between 11%-31% so far this year.

Former President Donald Trump’s tax and tariff policies are the hot button topic being discussed amongst voters, investors and economists. A Republican win would likely favor oil & gas, cryptocurrency, and banking sectors. Additionally, private prison operators, such as CoreCivic (CXW) and Geo Group (GEO), could also see a boost as Trump proposes a large-scale deportation initiative. Defense stocks may also see gains such as military contractor Booz Allen Hamilton (BAH) and assist to homeland security Leidos (LDOS). While names like Lockheed Martin (LMT) would benefit from increased government spend.

Conversely, a win for Vice President Kamala Harris could bring her $100Bn proposed investment in companies advancing artificial intelligence, semiconductor technology, and electric vehicles to fruition. Also, due to her policies on climate change and housing, companies related to affordable housing and renewable energy may benefit. Stocks such as entry-level focused homebuilder D.R. Horton (DHI) and the XHB ETF could see a rise. Harris also plans to raise the corporate tax rate from 21% to 28%, potentially impacting profit margins for some companies. Her focus on prescription drug price regulation and grocery price caps could weigh on firms like Pfizer (PFE), Eli Lilly (LLY), and grocers.

For either candidate’s agenda to advance, however, some level of unified party control in Congress would be required. As it relates to the control of Congress, it is expected the Republicans will retake the Senate however, the House is not as clear. A division within the government will limit these presidential candidate’s agendas especially as it relates to altering tax rates.

“It’s rare for candidates to deliver on every proposal once in office,” noted Naveen Malwal, institutional portfolio manager at Strategic Advisers. “Basing investment decisions solely on campaign promises can be risky.”

Investors should also monitor other market catalysts, such as corporate earnings reports, Fed rate cut decisions, as well as economic and inflation trends. These additional market influences can typically impact markets in a greater way than party platforms.