Stock trader on the New York Stock Exchange.
Michael M. Santiago | Getty Images News | Getty Images
Since the presidential election, the stock prices of many large American companies have increased.
The top 10 stocks in the S&P 500 Index, whose returns are analyzed based on closing prices from November 5 to November 20, have returned more than 18% since Election Day, according to data provided by S&P Global Market Intelligence. Recorded.
Shares of two companies, law enforcement technology provider Axon Enterprises (AXON) and electric car maker Tesla (TSLA), led by President-elect Donald Trump’s adviser Elon Musk, rose more than 35%. According to S&P Global Market Intelligence.
In contrast, the S&P 500 index rose about 2% over the same period.
Buying for short-term gains is ‘usually a bad idea’
Jeremy Goldberg, a certified financial planner, portfolio manager, and research analyst at Professional Advisory Services, ranked No. 37 on CNBC’s annual 100 Financial Advisors list, believes investors are short-term He said people should be wary of buying individual stocks based on their rise.
“Usually that’s a bad idea,” Goldberg says. “Momentum is a powerful force in markets, but relying solely on short-term price movements as an investment strategy is risky.”
Goldberg said investors need to understand what’s driving this movement and whether the factors driving stock prices are sustainable.
Why did these stocks outperform?
Investment experts say the strong stock returns were partly due to the Trump administration’s policy stances that are expected to benefit certain companies and industries.
Jacob Manoukian, head of U.S. investment strategy at JPMorgan Private Bank, said deregulation and a flexible view of mergers and acquisitions are two “key” themes driving the bullish mood after Trump’s victory. said.
Relying solely on short-term price movements as an investment strategy is dangerous.
jeremy goldberg
Portfolio Manager and Research Analyst at Professional Advisory Services, Inc.
Additionally, experts said that during President Trump’s second term, U.S. regulators are likely to be significantly relaxed in allowing potential mergers.
Companies in the streaming ecosystem, such as Warner Bros. Discovery (WBD), which owns the Max streaming service, and Walt Disney Company (DIS), which owns Disney+, could benefit from loosened integration rules. They said there was.
Rosy profits and AI
Experts said the outperformance of some stocks was tied to rosy quarterly results and guidance some companies released around or after Election Day.
Many of these companies cite artificial intelligence as a driver of growth.
For example, Palantir Technologies (PLTR) saw “unprecedented” demand for its AI platform in the third quarter, which led to “very strong” revenue, according to Treasurer and CFO. )’s David Glaser told investors on Nov. 4.
Similarly, Axon beat analysts’ expectations in its Nov. 7 results, and officials touted the company’s “AI-era plans” and raised its profit outlook, Goldberg said.
Axon and Palantir stock prices rose 38% and 22%, respectively, from Nov. 5 to Nov. 20, according to S&P Global Market Intelligence.
Experts say some companies benefited from a combination of policy and profits.
Data Hall B at Facebook’s Fort Worth data center in Texas is lined with servers.
Paul Moseley/Fort Worth Star-Telegram/Tribune News Service (via Getty Images)
Take energy provider Vistra Corp. (VST), for example. The company’s stock price rose 27% after voting day.
Vistra’s chief strategy and sustainability officer, Stacey Dore, said during the company’s third-quarter earnings call on Nov. 7 that Vistra has large data centers in Texas, Pennsylvania, and Ohio. He said he is in talks with “hyperscalers” to build or upgrade gas and nuclear power plants.
Technology companies are building more and more such data centers to power the AI revolution, and they need to source more and more energy to run them.
“Elon Musk Premium”
And there’s also the Elon Musk factor.
Professional Advisory Services’ Goldberg said Tesla stock received an “Elon Musk premium” with Trump’s victory.
Tesla CEO Musk was one of President Trump’s key campaign supporters. President Trump named him co-director of the new Department of Government Efficiency. The electric car maker’s stock soared 14% the day after the election and was up nearly 30% by the end of the week.
President-elect Donald Trump and Elon Musk speak ringside during the UFC 309 event at Madison Square Garden on November 16, 2024 in New York.
Chris Unger | UFC | Getty Images
But experts say there are further tailwinds for Tesla stock.
As an example, President Trump wants to eliminate the $7,500 federal tax credit for EVs. Repealing the policy is expected to hurt Tesla’s EV rivals.
Tesla is also developing self-driving car technology. During Tesla’s recent earnings call, Musk said he would use his influence within the Trump administration to establish a “federal approval process for self-driving cars.”
