Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Wall Street is busy trying to figure out how to profit from a Biden presidency

Wall Street is busy trying to figure out how to profit from a Biden presidency

Joe Biden will be the 46th president of the United States -- and Wall Street is busy trying to figure out how to profit from that.

Monday's big market rally likely had more to do with the reported efficacy of the Covid-19 vaccine that Pfizer (PFE) and BioNTech (BNTX) are working on than Biden's victory.

But market strategists say investors need to start preparing for how a Biden presidency will impact certain sectors.

Infrastructure and solar set to shine


Solar companies and other leaders in the alternative energy industry are poised to be among the bigger beneficiaries of a Biden White House, but that potential windfall may already be priced into the stocks.

The Invesco Solar ETF (TAN) -- which trades under the appropriate ticker symbol TAN -- surged nearly 40% in the past three months on anticipation of a Biden win but has pulled back so far this week. The ETF owns big positions in SolarEdge Technologies (SEDG), First Solar (FSLR) and Sunrun (RUN).

Investors are also betting (and you've likely heard this before) that there will finally be a renewed focus in Washington on passing a big infrastructure spending bill.

There were hopes that the Trump administration would make infrastructure improvements one of its economic priorities, but that never happened. However the need to upgrade highways, railroads and bridges is even more pressing now given the jobs crisis brought on by the pandemic.

The Global X U.S. Infrastructure Development ETF (PAVE) has rallied this week and is up more than 15% over the past three months.

The fund owns stocks such as building supplies manufacturer Fastenal (FAST), construction software firm Trimble (TRMB), power management company Eaton (ETN) and the big railroads CSX (CSX), Union Pacific (UNP), Norfolk Southern (NSC) and Kansas City Southern (KSU).

Experts also point to the fact that Biden, as vice president under Barack Obama, has experience helping the economy recover from a recession.

"Investors should take some solace in the notion that Biden will be in somewhat familiar waters as he begins his Presidency," said Jeff Schulze, investment strategist at ClearBridge Investments, in a report. "As Vice President, Biden took office in the midst of the global financial crisis and helped steer the economy back into an expansion characterized by steady but slow economic growth."

Funds focusing on environmental, social and governance (ESG) issues have also rallied in the past few weeks on expectations of a Biden win. The ESG wave is even impacting the fixed income market. State Street launched a new ESG-focused ETF dedicated to corporate bonds on Tuesday.

Cannabis stocks have also surged as hopes increase for federal decriminalization of recreational marijuana.

The new regime in Washington may also have an impact on the market beyond specific industries and sectors.

Value over growth


Biden's win could usher in a change in the types of investments that drive the overall market. Value stocks may once again thrive while tech and other high growth stocks finally see a slowdown in their epic gains.

"There could be a shift to value sectors like health care," said Andrew Rosen, president of Diversified Lifelong Advisors, in an interview with CNN Business.

"It's healthy to see the recent tech pullback. There needs to be more diversification."

Valuations for tech and other growth stocks may also come under pressure if the economy continues to rebound next year -- a scenario that could pick up pace once a Covid-19 vaccine becomes widely available.

Investors may soon rotate back into hard hit consumer stocks, many of which still pay solid dividends despite the pandemic. With that in mind, defensively oriented stocks -- companies with lots of cash and little debt -- could thrive.

"Companies with stable balance sheets, reliable cash flows, and the capital to bridge the gap created by Covid-19 would outperform," said Lauren Goodwin, economist and multi-asset portfolio strategist with New York Life Investments, in a report Monday.

International stocks, particularly those in markets like China that were a main target of Trump's trade wars, could rebound too.

"Emerging markets could benefit from less of an 'America First' policy under Biden," Rosen added. "He may try to fix some international relationships to pave way for less acrimonious trade policies."

Despite the early returns, it may be unwise to focus too heavily on how markets are doing in the immediate aftermath of the election. Short-term successes could also become longer-term investing flops.

"Financials were the best-performing sector on the day after the 2016 election, and that group, along with energy, were the top two over the ensuing month," ClearBridge's Schulze noted. "While these groups continued to show strength into early 2017, they have been two of the three worst-performing sectors since."

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×