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Clinton or Trump? It could make a big difference to these stock sectors

As Election Day nears and a unique campaign season ends, some sets of stocks will be impacted more than others.

John Canally, chief economist strategist for LPL Financial, says the sectors most prone to fluctuate based on the presidential election results are financials, energy and health care. He named these groups through fundamental and technical analyses.

One group has been particularly at-risk during the election cycle.

"So far, it's been the financials. Financials have struggled here as Mrs. Clinton has started to lead in the polls," Canally said Friday on CNBC's "Trading Nation."

According to LPL Financial research, there's a connection between the rising odds of Clinton clinching the election and banks' performance relative to the S&P 500 suffering.

"She's probably going to impose more regulation on financials than Mr. Trump would, and so you're starting to see some underperformance in financials as she becomes more of the clear-cut winner in November," he said.

And while he grants that a rate increase from the Federal Reserve would help financials, "I think having Mrs. Clinton as president would likely be a drag [for the financial sector]."

Federal Reserve chair Janet Yellen's speech on Friday at the annual Jackson Hole, Wyoming, summit and the CNBC interview with Fed Vice Chairman Stanley Fischer renewed expectations that a raise in interest rates is near.

When it comes to the energy sector, its performance is likely "going to determined by the oil price, which of course is determined globally," Canally said. But the candidates have starkly different views on how to address energy, oil consumption and climate change.

In July, Democrat Hillary Clinton said "there has to be a greater fee on extraction while we do everything we can to transition to clean, renewable energy and energy efficiency."

Conversely, Donald Trump has called for optimizing domestic drilling and hutting down partnerships with oil-rich OPEC nations.

"If Mrs. Clinton wins and it's a landslide, a historic landslide, she may be able to pull the house over to the Democrats," Canally said, and consequently succeed in passing energy-related legislation that may hurt the industry's incumbents.

The third sector under this umbrella, according to Canally, is health care, which has a rather mixed relationship to the polls, according to LPL Financial research. While Clinton has expressed support for President Barack Obama's Affordable Care Act, Trump has strongly opposed it.

"The ACA means more insured patients, so the healthcare facilities and managed care groups should have done well recently as Clinton's odds of winning have increased," a recent LPL Financial note said.

But according to the firm's research, health-care stocks' performance relative to the market has struggled as Clinton's odds of winning the race have risen since May.

The politics-related stock slides have come for biotech names. Clinton has expressed concern about increasing drug prices, most recently issuing a statement regarding drug manufacturer Mylan's price increases of its EpiPen, which provides emergency treatment for allergic reactions.

Mylan announced Monday it would sell a generic version of the EpiPen for $300, half the price of its brand-name product.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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