After her solid performance in the second presidential debate and the damage inflicted on Trump’s campaign by his 2005 comments, Hillary Clinton’s chances of becoming the next president have gone up substantially.
According to CNN, a majority of voters watching the debate thought Hillary won the debate (57% to 34%). The latest WSJ/NBC poll says Clinton now has a 9-point lead over Trump, among likely voters. And NYT’s election model suggests, Clinton now has an 87% chance of winning the presidency.
Things could still change in the coming weeks and investors should be prepared to position their portfolio for either outcome. Some time back we discussed stocks and ETFs that could benefit in a Trump presidency (Prepare for a Trump Presidency with These Stocks & ETFs). So let’s now discuss what could likely happen if Hillary wins the White House.
The market has been closely watching the race and already priced in a Clinton victory as of now so I don’t expect a huge rally but a moderate relief rally is likely as the election uncertainty has been clouding the outlook for stocks. Markets hate uncertainty and Trump’s election would no doubt increase volatility.
Buy Infrastructure, Defense, Alternative Energy, Gun & Mexico Stocks
Hillary has announced a $275 billion plan to improve US infrastructure over the next five years. She says: “the heart of my plan will be the biggest investment in American infrastructure in decades, including establishing an infrastructure bank that will bring private sector dollars off the sidelines and put them to work there.”
Deere (DE - Free Report) —a Zacks Rank #1 (Strong Buy) stock could be a major beneficiary of higher infrastructure spending. Railroad stocks like CSX (CSX - Free Report) are also worth a look. (See: ETF Strategies for Q4)
Clinton has talked about lifting defense spending and ending defense sequester cuts. Take a look at defense stocks like Northrop Grumman (NOC - Free Report) or top ranked ETF iShares Aerospace & Defense ETF (ITA - Free Report) .
She has also promised investing in innovations to counter cyber security threats. During the first presidential debate, she said: “cyber warfare will be one of the biggest challenges facing the next president.” PureFunds ISE Cyber Security ETF (HACK) is a great way of gaining diversified exposure to this industry.
Smith & Wesson —a Zacks Rank #1 (Strong Buy) stock—could see a bounce as gun sales could soar in the wake of the threat of stricter gun laws, which Hillary would likely push for. She has emphasized that gun control is one of her top priorities.
Clinton plans to set goals to generate enough renewable energy to power every home in America, with half a billion solar panels installed by the end of her first term and reduce American oil consumption by a third. Alternative energy ETFs like PowerShares Clean Energy ETF (PBW - Free Report) could get a boost from her election.
Mexican stocks and the peso had suffered of late, partly due to the possibility of a Trump win. In fact, after the second presidential debate, the peso rallied to a one-month high. Keep an eye on iShares Mexico ETF (EWW - Free Report) .
Healthcare, Pharma & Biotech
Clinton plans to continue and expand Obamacare and her presidency would thus boost hospital operators. Check out the Buy ranked iShares U.S. Healthcare Providers ETF (IHF - Free Report) .
She also plans to rein in hefty increase in drug prices and that may pressure profit margins of biotech and drug companies. Her tweet on price gouging by drug makers had sent iShares NASDAQ Biotech ETF (IBB - Free Report) plunging last year.
Avoid Big Banks, Oil & Energy
In an op-ed in the New York Times, Clinton wrote; “As president, I would not only veto any legislation that would weaken financial reform, but I would also fight for tough new rules, stronger enforcement and more accountability that go well beyond Dodd-Frank.”
The Act, which was enacted in the aftermath of the financial crisis, imposed stricter regulations on banks. Big banks like JP Morgan Chase (JPM - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C) are likely to face more regulatory costs ahead.
Her win could also pressure oil stocks which have been rallying of late on hopes on an OPEC deal. (Read: If Oil Continues to Soar, These 7 ETFs May Fall)
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