Stock Market Outlook: Biden vs. Trump Victory

As the 2024 presidential election approaches, many investors are wondering how a victory for either Joe Biden or Donald Trump could impact various sectors of the stock market.                                                   

Each candidate has policy preferences that could shape the market in different ways.   

To prepare early, it’s worth taking a look ahead at the potential effects of a Biden or Trump victory on key sectors and stocks.                                                     

Biden Victory: Continued Infrastructure Investment and Green Energy Growth 

If Biden secures a second term, his administration is expected to continue its robust investment in infrastructure and green energy.                                            

The Infrastructure Investment and Jobs Act, which was a hallmark of Biden’s first term, already funneled billions into upgrading the nation’s roads, bridges, and broadband networks. A       continued focus on infrastructure would benefit companies involved in construction, materials, and related industries such as Caterpillar Inc. (NYSE: CAT).                   

CAT continues to screen well, with the exception of its valuation:                

However, this is slightly unfair because CAT is benchmarked against its industry peers, which screen cheap at 12.6 times earnings:                            

• CAT is poor value based on its earnings relative to its share price (15.24x), compared to the US Farm & Heavy Construction Machinery industry average (12.6x)                                       

15x earnings may be a slight premium compared to other heavy equipment companies, but it’s not very demanding relative to other sectors, like consumer defensive or tech stocks.                                     

Aside from CAT, companies in the solar, wind, and electric vehicle sectors could also benefit under another Biden term.                                          

We saw hints of this recently with the new tariff hikes on Chinese chips, EVs, and solar products, and the tariff rate is now set to double to 50% on solar cell imports this year.                                  

Plus, investments in these areas not only contribute to environmental goals but also drive economic growth and job creation. So firms like First Solar (NASDAQ: FSLR), which we discussed last week, or Enphase (NASDAQ: ENPH) could experience significant tailwinds under Biden’s policies.                      

Trump Victory: A Boost for Crypto?

A Trump victory could bring favorable conditions to the cryptocurrency market. During his previous term, Trump took a hands-off approach to crypto regulation, allowing the market to grow rapidly.                      

A return to such policies could further bolster the growth of Bitcoin and other cryptocurrencies, making them attractive investments. Companies like Marathon Digital (NASDAQ: MARA) and other US-based Bitcoin miners could see significant benefits from this environment, continuing their upward trajectory.                          

In case there was any doubt of his stance, Trump recently stated: "I am very positive and open minded to cryptocurrency companies and all things related to this new and burgeoning industry," adding, "our country must be the leader in the field, there is no second place."                    

Bottom line? A Trump win likely provides some more crypto tailwinds, while under a Biden victory infrastructure is likely to keep booming, and solar companies may see more time in the sun.                 

Want to get in touch? Email us at news@wallstreetzen.com.