What A Trump Win Could Mean For Financial, Energy Stocks: Lessons From 2016

The hotly contested 2024 election between Vice President Kamala Harris and former President Donald Trump has Americans bracing for a down-to-the-wire finish. While Harris has a slight lead in polling forecasts, the race remains an essential toss-up.

As market participants consider investment ideas tied to the election, telling signs might be found in the aftermath of the 2016 election.

Election Debrief: Trump won the 2016 election in a surprising upset over Democrat Hillary Clinton. He ran on a platform of building a wall on the U.S.-Mexico border, repealing Obamacare, enacting deregulation and prioritizing fossil fuels.

Trump lost the 2020 election to Democrat Joe Biden.

2016 Winners: Large bank stocks benefitted the most from Trump’s 2016 triumph.

Shares of JPMorgan Chase & Co (NYSE:JPM) soared over 13% in the week following Trump’s surprising win, according to data from Yahoo Finance. Goldman Sachs Group Inc (NYSE:GS) traded up over 17% that week. Morgan Stanley (NYSE:MS) saw an 18% bump in share price. Wells Fargo & Co (NYSE:WFC) also had a fantastic week as shares jumped over 16%.

Blackstone Inc‘s (NYSE:BX) Stephen Schwarzman is among Trump’s biggest supporters on Wall Street. Shares of the private equity giant traded up nearly 9% in the week following the 2016 election.

The market’s preference for financial stocks after Trump's win comes as no surprise, given his strong support for deregulating the financial sector.

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Trump’s 2016 victory was also favorable to the oil and coal industries due to his support for deregulating the energy sector and prioritizing American energy production. Shares of coal mining company Arch Resources Inc (NYSE:ARCH) rocketed up over 21% in the week following the election. Exxon Mobil Corp (NYSE:XOM) and Chevron Corporation (NYSE:CVX) saw modest gains.

2016 Losers: Indexes in foreign countries fell overnight on election day 2016, according to CNN. The Mexican peso plunged 9%, while European indexes fell a few percentage points. The Russia-tracking iShares MSCI Russia ETF (NYSE:ERUS) ticked higher overnight.

Tech stocks closed the week in the red, perhaps due to regulatory concerns. Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) all ticked down 2 to 3 percentage points.

Clean energy stocks faced challenges after the 2016 election. Electric vehicle manufacturer Tesla Inc. (NASDAQ:TSLA) ended the week down over 5%, following Trump’s victory. At the time, CEO Elon Musk had not yet endorsed Trump for a future run, but the market reaction reflected broader concerns for clean energy under a pro-fossil-fuel administration. Canadian Solar Inc. (NASDAQ:CSIQ) saw an even steeper decline, shedding over 16% of its market value in the week after the election.

Why it Matters: If history were to repeat itself, a Trump win in 2024 would likely bode well for financial, oil and coal companies. On the flip side, tech companies under regulatory scrutiny and clean energy stocks could see declines in Trump’s hypothetical return to the White House.

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