The beginning of November saw Trump retake the White House along with the Republican party taking control of both the House and Senate by slim margins. What followed has been coined the “Trump Trade,” as markets initially responded positively to the victory. The S&P 500 rose 5% from the 4th to the 11th before cooling down slightly through the rest of the month. However, not all industries held up as well as others. Big winners of the month included financials and energy stocks, which rose on expectations of more deal making on Wall Street and a potentially friendlier regulatory environment for the sectors. Notably, a loser of the “Trump Trade” was health care, which initially rallied upon the victory but later fell when Trump announced Robert F. Kennedy Jr. as his nominee to run the Department of Health & Human Services. RFK has a been a noted skeptic of vaccines and other aspects of the U.S. health care system, proposing tighter regulatory scrutiny within the industry. His potential confirmation in the Senate will be closely followed and may face hurdles.
Moving forward, with Trump back in the Oval Office, it will be important to watch what trade policies get implemented as he has threatened tariffs on a growing list of foreign allies and enemies alike. Occasionally tariffs on specific goods and services can be good for domestic industries that need protection from foreign producers that undercut prices, but broad-based tariffs are generally viewed as anti-competitive and harmful to the consumer. It remains to be seen what tariffs get enacted and how large those tariffs will actually be. We will continue to closely follow potential policy changes and their impacts on various sectors and companies in the year ahead.
