Stock traders swarmed the floor at the New York Stock Exchange, as captured in a lively photo by Michael M. Santiago for Getty Images News. Over recent weeks, the stock prices of numerous large U.S. companies have experienced significant increases following the presidential election.
Notably, the top 10 stocks within the S&P 500 index have delivered returns of 18% or more since Election Day. This data, gathered by S&P Global Market Intelligence, assessed returns based on closing prices from November 5th to November 20th. Among these companies, Axon Enterprise, a key player in law-enforcement technology, and Tesla, the electric vehicle juggernaut under Elon Musk, who also advises President-elect Donald Trump, have both seen their stocks rise by over 35%. During the same period, the S&P 500 edged up by about 2%.
Now, before you rush to invest your money, experts like Jeremy Goldberg advise caution. As a certified financial planner, portfolio manager, and research analyst at Professional Advisory Services, Inc., which proudly holds the 37th spot on CNBC’s Financial Advisor 100 list, Goldberg warns against making investment decisions based solely on short-term price surges. “It’s usually a bad idea,” he remarks, highlighting that while momentum is a potent market force, using short-term gains alone as an investment strategy can be quite risky.
So, what exactly fueled these remarkable stock performances? Investment experts point to policy stances from the Trump administration that were expected to favor certain companies and industries. Jacob Manoukian from J.P. Morgan Private Bank mentioned deregulation and more lenient views on mergers and acquisitions as key themes that sparked this optimism.
The anticipation of regulatory leniency around mergers could also work in favor of companies in the streaming sector, like Warner Bros. Discovery and Disney+, potentially boosting their market positions.
Interestingly, for some companies, it wasn’t just policy but also very promising quarterly earnings and optimistic forecasts that contributed to stock gains. Some businesses even credited artificial intelligence as a major growth catalyst. Palantir Technologies, for instance, reported “unprecedented” demand for its AI platform, which contributed to strong earnings.
Similar positive results were seen with Axon, which not only surpassed analysts’ expectations but also emphasized its “AI era plan” in their earnings call, boosting earnings projections. Axon and Palantir saw their stocks rise by 38% and 22% respectively over this period.
Different companies experienced a mix of benefits from both policy shifts and earnings announcements. Take Vistra Corp., for example. The energy provider saw its stock climb 27% post-election. They’re eyeing collaborations with large data centers to support the burgeoning AI sector with necessary energy resources.
And then there’s Tesla, which has been basking in what some experts call the “Elon Musk premium.” Trump’s victory seemed to boost Tesla’s stock, likely influenced by Musk’s backing of Trump’s campaign and new involvement in government operations. Furthermore, Tesla’s plans in autonomous vehicle technology, bolstered by potential regulatory support from the new administration, have added an extra layer of optimism for investors.
In summary, while recent election outcomes and administration policies have significantly influenced the market, it’s crucial for investors to dive deeper into what fuels these surges, ensuring that the reasons for a stock’s movement are genuinely sustainable for the long haul.
