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How did various sectors perform during Trump’s presidency, and what drove their success? 📊 From tech to healthcare and beyond, Trump’s policies, tax cuts, and deregulation shaped market trends in ways investors can’t ignore.
Dive into our comprehensive breakdown of the top-performing sectors and uncover the drivers behind their growth. Plus, explore new additions that highlight even more investment opportunities.
This image is a snapshot of how quickly fortunes can change in the investment world. It’s a reminder that smart moves in the right sectors—like those that thrived under Trump’s policies—can make a huge difference. Whether it’s tech, energy, or finance, knowing where to invest and why is key to staying on the winning side.
1. Technology
Performance: The tech sector, led by major companies like Apple, Microsoft, Amazon, and Alphabet, was the top-performing sector during Trump's term, significantly boosting the S&P 500.
Drivers: Continued innovation, rapid growth in cloud computing, and the dominance of FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) propelled the sector. Tax cuts helped major corporations increase share buybacks, enhancing investor returns.
Regulation: Trump’s administration was relatively hands-off regarding tech regulation, creating an environment favourable for tech growth. The sector saw heightened scrutiny in the latter half of his term, yet regulatory action remained limited.
2. Financials
Performance: Financial stocks, including major banks like JPMorgan Chase, Goldman Sachs, and Bank of America, performed well, particularly in the early years of Trump’s term.
Drivers: Trump's administration implemented a rollback of some Dodd-Frank regulations, reducing compliance costs for banks and easing restrictions on lending. Additionally, the 2017 Tax Cuts and Jobs Act lowered the corporate tax rate, boosting profits for banks and financial services companies.
3. Industrials
Performance: The industrial sector, which includes companies involved in construction, defense, and manufacturing, performed solidly under Trump, particularly pre-COVID.
Drivers: Trump's focus on infrastructure spending, defense contracts, and domestic manufacturing stimulated growth in this sector. Trade policies aimed at promoting "America First" manufacturing benefitted some industrial companies, though tariffs on imports, particularly from China, created uncertainty and mixed results for multinational industrials.
Defense Stocks: Aerospace and defense companies, such as Boeing, Lockheed Martin, and Raytheon, saw increased federal spending and strong performance, boosted by rising defense budgets.
4. Healthcare
Performance: The healthcare sector saw substantial growth, with contributions from pharmaceutical companies, biotech, and health insurers.
Drivers: Drug and biotech companies, including Pfizer and Moderna, experienced growth due to deregulation efforts that aimed to speed up drug approvals.
Trump's push to lower drug prices created mixed impacts on pharmaceutical stocks, but overall, the sector thrived due to advancements in medical technology, demographic trends, and a strong focus on vaccine production during the COVID-19 pandemic.
5. Consumer Discretionary
Performance: Consumer discretionary stocks, particularly those in e-commerce, travel, and retail, were among the strongest performers.
Drivers: Tax cuts and a strong labor market during the pre-COVID years increased disposable income, boosting spending in areas like luxury goods, automobiles, and entertainment. Amazon led the sector’s growth, benefiting from e-commerce trends and logistical efficiencies.
Impact of COVID-19: COVID-19 dramatically shifted consumer habits, with e-commerce, home improvement, and streaming companies (e.g., Amazon, Home Depot, Netflix) experiencing a surge, even as traditional retail and travel-related stocks suffered.
6. Energy (pre-COVID)
Performance: Energy was a volatile sector during Trump’s term, with strong initial performance that was later hurt by the 2020 oil price collapse.
Drivers: Trump’s focus on energy independence, deregulation, and support for fossil fuel industries (e.g., rolling back environmental restrictions and promoting drilling) initially boosted energy stocks. However, the sector was hit hard by the 2020 oil price crash caused by a drop in global demand due to the pandemic, severely impacting companies like ExxonMobil and Chevron.
Renewable Energy: While Trump was not supportive of renewables, the long-term trend towards green energy meant that renewables continued to see investor interest and growth.
7. Real Estate
Performance: The real estate sector experienced moderate growth during Trump’s term, driven by low-interest rates and a strong pre-COVID economy.
Drivers: Trump’s tax reforms, including changes to the treatment of real estate investments, benefitted property developers and REITs. Low-interest rates made borrowing cheaper, boosting construction and property purchases.
Impact of COVID-19: While commercial real estate suffered during the pandemic, residential markets surged as remote work trends increased demand for suburban housing.
8. Retail
Performance: Retail showed a mix of winners and losers, with e-commerce dominating and traditional brick-and-mortar stores struggling.
Drivers: Tax cuts increased disposable income, benefiting consumer spending. The rise of online shopping platforms like Amazon redefined retail dynamics. Large discount chains like Walmart thrived due to their extensive e-commerce infrastructure and adaptability during COVID-19.
Impact of COVID-19: The pandemic accelerated the decline of traditional retail while bolstering online sales and delivery services.
9. Utilities
Performance: Utilities delivered steady returns, benefiting from low-interest rates and their reputation as a defensive sector.
Drivers: Trump’s support for energy independence indirectly benefitted utilities, particularly those relying on natural gas. Despite deregulation efforts, investor interest in clean energy utilities continued to grow due to the shift toward renewable energy.
10. Communication Services
Performance: The communication services sector saw robust growth, driven by companies like Facebook, Alphabet, and Netflix.
Drivers: The increasing reliance on digital communication and entertainment during Trump’s term fuelled the growth of social media, streaming, and telecom giants. Tax cuts and a hands-off regulatory approach further supported profitability.
Impact of COVID-19: Lockdowns during the pandemic led to a surge in demand for streaming services and digital communication platforms, solidifying the sector’s growth trajectory.
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Alpesh Patel OBE
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Disclaimer: The content provided on this blog is for informational purposes only and does not constitute financial advice. The opinions expressed here are the author's own and do not reflect the views of any associated companies. Investing in financial markets involves risk, including the potential loss of your invested capital. Past performance is not indicative of future results.
You should not invest money that you cannot afford to lose. Mentions of specific securities, investment strategies, or financial products do not constitute an endorsement or recommendation. The author may hold positions in the securities discussed, but these should not be viewed as personalised investment advice.
Readers are encouraged to conduct their own research and seek professional advice before acting on any information provided in this blog. The author is not responsible for any investment decisions made based on the content of this blog.