For years, the only thing that seemed to matter to the stock market was the Federal Reserve and the flow of cheap money stimulus. Economic data was largely brushed aside, and only considered in the lens of what it could mean for interest rates. Corporate earnings, which have been in an outright recession for more than a year, have been ignored.
But with the summer coming to a close, investors have something new to worry about: The epic political slugfest between presidential hopefuls Donald Trump and Hillary Clinton.
Both are seen by their political opponents as the reincarnation of pure evil. And both are running on a set of wildly different policies resulting in a binary post-election outcome for Wall Street to consider.
If the Donald wins, trade policies will likely be tightened, energy exploration loosened and taxes lowered. If Clinton wins, coal is dead, biotechs are dead and the big banks are likely to get even bigger.
Here are 10 big-cap stocks that are set to rise, or fall, depending on the Election Day outcome.
Wal-Mart Stores, Inc. (NYSE:WMT) shares have enjoyed a nice rally out of its late 2015 low. But that could be undone by a Trump victory, as WMT is extremely sensitive to the path of low-skill wages.
Donald Trump’s cornerstone issue is immigration, and his desire to stop illegal inflows and more strictly enforce existing deportation laws. With estimates of around 11 million illegals currently in the country, this will effectively shrink the low-wage workforce and push wages higher.
The company will next report results on Nov. 17 before the bell. Analysts are looking for earnings of 97 cents per share on revenues of $117.9 billion.
Wall Street titan Goldman Sachs Group Inc (NYSE:GS) has been a big donor to Hillary Clinton (the chatter about her speech transcripts) despite her stated support for increased regulatory oversight.
Yet Donald Trump, via an advisor, seems to desire the reimplementation of the Depression-era Glass-Steagall Act — repealed by Bill Clinton in 1999 — that separates riskier investment banks from commercial banks. Hillary Clinton said back in November that she opposed this idea, which is good news for GS.
The company will next report results on Oct. 18 before the bell. Analysts are looking for earnings of $3.73 per share on revenues of $7.3 billion. Edge Pro subscribers are enjoying a 7% gain in their Sept $165 GS calls.
Exxon Mobil Corporation (NYSE:XOM) has rebounded strongly from the lows seen at the start of the year, outpacing the accompanying rebound in crude oil prices.
Trump has advocated American energy independence, which is political lingo for more aggressive drilling for oil and gas in American lands and waters. Clinton, a believer in global warming with a stated preference for renewable energy, has said she will work to cut U.S. oil consumption by a third. A win for Hillary Clinton would be loss for XOM and the oil and gas sector.
The company will next report results on Oct. 28 before the bell. Analysts are looking for earnings of 80 cents per share on revenues of $75.3 billion.
Defense contractor General Dynamics Corporation (NYSE:GD) has seen shares stall near new highs throughout August no doubt as investors await clarity on the election. Donald Trump has loudly proclaimed that America’s military needs to be rebuilt and strengthened (using the examples of fighter planes older than their pilots) to secure the peace.
Clinton also seems to support a slight increase in military spending (by ending the defense budget sequester), but is focusing on the need to reform the acquisition process by “stretching every dollar.” A Trump victory would be preferred here.
The company will next report results on Oct. 26 before the bell. Analysts are looking for earnings of $2.38 per share on revenues of $7.9 billion.
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