How Donald Trump's 2024 Election Win Has Affected the Stock Market
- Miguel Virgen, PhD Student in Business
- Nov 11, 2024
- 4 min read
Updated: Mar 12
Donald Trump's victory in the 2024 presidential election has sent waves through the financial markets, sparking a mix of optimism and caution among investors. Given his economic policies during his first term—such as tax cuts, deregulation, and a strong stance on trade—it is not surprising that Trump's re-election has led to a volatile, but ultimately bullish, stock market environment.
The stock market's initial response to Trump’s 2024 win was a sharp rally. Investors, especially in certain sectors, welcomed the certainty of another term under a leader with a familiar approach to fiscal and economic policy. Key sectors that benefitted from this rally included energy, defense, and financials, which have historically thrived under Trump’s administration.
1. Tax Cuts and Deregulation During his first term, Trump’s administration implemented a significant corporate tax cut, which provided a boost to earnings for many major corporations. This tax-friendly environment is likely to continue in his second term, with potential for further reductions or simplifications in the tax code, which could continue to support corporate profitability. Additionally, Trump’s pro-business stance means that regulatory hurdles, especially for industries like energy and banking, may be reduced, making it easier for companies to operate efficiently and increase their bottom lines.
2. Energy Sector Boost Trump’s pro-energy policies, including favoring fossil fuels and reducing environmental restrictions, have led to strong growth in the energy sector. With global energy prices still fluctuating, Trump’s re-election signals continued investment in oil, gas, and coal production, as well as less emphasis on the push for renewable energy mandates. This has benefited major energy companies, particularly those involved in drilling, refining, and pipeline construction.
3. Defense and Infrastructure Another sector that stands to gain is defense, as Trump has consistently prioritized military spending, including the modernization of the U.S. armed forces. With rising geopolitical tensions, particularly with China and Russia, defense contractors are expected to continue to see steady demand. Similarly, Trump's focus on infrastructure spending could drive long-term growth in construction and materials sectors, benefiting companies that work on large-scale government contracts.
As investors adjust to the market's post-election landscape, several stocks stand out as potentially poised for a strong bull run under Trump’s continued leadership. Here are three sectors and stocks that could benefit:
Exxon Mobil (XOM) – Energy Sector
Exxon Mobil, as one of the largest publicly traded oil and gas companies in the world, is likely to see substantial gains during Trump’s second term. Under Trump's presidency, policies favorable to fossil fuel production—such as opening up federal lands for drilling and reducing environmental regulations—could boost Exxon’s operations and bottom line. With oil prices often volatile, Exxon remains a solid pick due to its vast infrastructure and diverse operations. A potential global energy crisis could further accelerate demand for oil and gas production, pushing stocks like Exxon higher.
Lockheed Martin (LMT) – Defense Sector
Lockheed Martin, a key player in the U.S. defense industry, stands to benefit from Trump's commitment to military spending and defense modernization. With the ongoing strategic competition between the U.S. and countries like China, Lockheed Martin is expected to see sustained growth in demand for its advanced military systems. Trump's focus on increasing military budgets and investing in defense technologies should provide a strong tailwind for the company’s stock, especially in areas like aerospace, missiles, and cybersecurity.
JPMorgan Chase (JPM) – Financials Sector
Under Trump, financials have historically performed well, due to deregulation efforts like the rollback of Dodd-Frank restrictions and policies favoring lower taxes for corporations. JPMorgan, as one of the largest and most well-capitalized banks in the U.S., stands to benefit from both favorable tax policies and a potential rise in interest rates, which would boost bank profitability. As the economy remains resilient, JPMorgan could be well-positioned to thrive, especially with its diversified business model spanning retail banking, asset management, and investment banking.
Trump’s 2024 election win has largely fueled a bullish sentiment in the stock market, especially for sectors like energy, defense, and financials. While the long-term effects of his policies will play out over time, companies in these industries are well-positioned for growth. As always, investors should remain mindful of potential risks, but with a market-friendly policy agenda, stocks like Exxon Mobil, Lockheed Martin, and JPMorgan Chase appear primed to perform well in the coming years.
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