What To Expect With the Stock Market If Trump Wins the Presidency
Written by
John Csiszar
Edited by
Chris Cluff
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Regardless of who wins the November election, some stocks are likely to rally while others fall. But the stock market as a whole is likely to rise over the full term of the next president. This is based on historic data going back to 1945, which shows that the market has posted good average annual gains under both Republican and Democratic presidents.
This doesn’t mean, however, that there won’t be short-term market volatility both before and after the actual election, nor does it mean that certain sectors aren’t more likely to rise than others. After all, Donald Trump already served one term as president, and the policies he enacted then are likely to continue or even be amplified under a potential second term.
With the acknowledgement that no one can predict short-term market movements with any certainty, here’s a look at the best educated guesses as to what you can expect if Trump wins the presidency.
Interest Rates May Eventually Rise
Over the short term, bonds are likely to continue rallying regardless of who wins the presidency. This is because the Fed just began its campaign of interest rate cuts in September 2024. As this will likely continue into 2025, it’s perfectly reasonable to expect bond prices to trend higher over that time period, as market interest rates and bond prices have an inverse relationship. But some economists fear that a renewed and even amplified trade war under a second Trump term could eventually push up inflation, forcing the Fed to reverse course and ultimately begin raising interest rates once again.
At the level of the market itself, a survey of Bloomberg terminal users suggests that more investors would dump bonds under a second Trump term than if Harris wins the White House, which could erode bond prices and help drive interest rates higher.
Renewable Energy and Housing Stocks May Suffer
One of the clear distinctions between the two candidates in the 2024 election is in the area of renewable energy. Whereas Trump wants to roll back billions in federal tax credits and subsidies for the clean energy industry, Harris wants to funnel more money into it. This makes these stocks particularly vulnerable to a Trump victory.
The housing market is likely to rally under a Harris presidency, as the current VP has voiced support for a significant bump in home building and tax credits and down payment assistance for first-time homebuyers. But if interest rates rise under a Trump presidency, due to potentially rising inflation as a result of boosted tariffs on China, this could hurt any gains in the housing industry.
Trouble for Industries With Ties to China
One of the signature policies of Trump’s first term was higher tariffs on China. If Trump serves a second term, he may slap an additional 60% tariff on Chinese goods, on top of the 25% levels already in place. Whereas industries with ties to China may enjoy a relief rally under a Harris presidency, they may suffer greatly under a second Trump term. Whether or not Trump actually enacts those tariffs or not, in the short term, stocks with ties to China are likely to take a hit if Trump wins the election.
Potential Winners Under a Second Trump Term
Although some stocks may suffer if Trump wins a second term, others are much more likely to benefit. These could include companies in the defense, steel, prison, fossil fuel and banking industries. This is based on Trump’s proclivity to enact “America first” policies, particularly toward the banking and defense industries, and his focus on law and order and eliminating regulations in industries such as steel, banking and fossil fuels.
Stocks Continuing Higher Overall
For investors, one of the benefits of Trump running for a second term is that he already has a four-year track record in place. Looking at how the stock market performed under Trump’s first term may give an indication as to what to expect under a potential second term.
From the day of Trump’s inauguration in 2017 through his final day in office, the S&P 500 index gained 67%. That’s relatively close to the first-term performance of both Barack Obama and Bill Clinton, during which the S&P 500 posted returns of 85% and 79%, respectively.
This data demonstrates that over the long run, the U.S. stock market is very resilient and seems to perform well regardless of who is in the White House. For this reason, long-term investors may wish to ride out any short-term volatility if Trump wins a second term and simply continue to invest consistently over time.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
