Election trading playbook: Watch these stocks as Trump secures Republican nomination

Published Thu, Mar 7 20246:58 AM EST

Jesse Pound @/in/jesse-pound @jesserpound

Former President Donald Trump is getting closer to a potential second term in office, so Wall Street and investors are starting to position for how his policies could change the market's fortunes and whether certain stocks could benefit from them more than others. Despite Trump facing legal issues on multiple fronts, including a federal indictment that alleges he illegally conspired to discount votes in the 2020 election, he appears to be cruising to the Republican nomination once again. He dominated the Super Tuesday contests, leading his main rival Nikki Haley to suspend her campaign. "With around half of all Republican nomination delegates now pledged, Trump has won around 90% of them and has all but formally secured the Republican nomination for president," Goldman Sachs chief economist Jan Hatzius said in a note to clients Wednesday morning. The Trump campaign has been light on policy proposals so far, but Wall Street is already looking to his previous term, as well as those of other Republican presidents, to figure out which stocks could be winners in a second term. The potential boosts could come from tax cuts and reduced regulation of major companies, for example. "New tax cuts and an increasingly challenging fiscal profile appear more likely in a new Trump administration (provided Republicans also win control of the House and Senate), but stocks might be cheered by the prospect of continued support for the US consumer, as well as a new boost to earnings from a further drop in the corporate tax rate," Barclays strategist Venu Krishna said in a Jan. 30 note to clients. One group of stocks that could benefit is financials. Under a Republican president, banks and other financial companies could see lower capital requirements and possibly have an easier time getting deals through the Federal Trade Commission, according to a March 1 note from Goldman, which listed Wells Fargo and Piper Sandler among potential beneficiaries. Raymond James was listed by Goldman and in Barclays' Trump stock basket, according to the Jan. 30 note. Health-care stocks could rise for a similar reason. Barclays' Trump basket includes Boston Scientific and Vertex Pharmaceuticals . Energy is another area where government regulation is a key variable, with Republicans generally having a lighter touch on fossil fuels. A Trump term could benefit energy giants such as Chevron , but also smaller players such as Devon Energy or coal companies such as Peabody Energy , according to Goldman. One policy that Trump is pushing for is even higher tariffs on goods from China. That could be a boost to domestic steel names, such as Steel Dynamics and Cleveland-Cliffs , but also companies that are already bringing more production on shore, such as chipmaker Broadcom , Goldman found. Another group of industrial companies could get a piece of government spending from expansion of the Mexico border wall under a second Trump administration. Caterpillar was one of the companies involved previously, according to Goldman.