Analysts explained in a note this week that when Donald Trump won the 2016 US presidential election, the overall market reaction was muted, but there were significant changes in specific sectors.
The investment firm said financial services companies, particularly banks and insurance companies, led the way and delivered strong growth. Sallie Mae shares rose 37% and Freddie Mac shares rose 97% in seven trading days.
Bonds and proxies such as utilities and REITs were selling off as investors expected a fiscal stimulus package and a cut in corporate tax rates, analysts said.
The healthcare sector, especially the pharmaceutical and biotech sector, has seen a rally. Analysts noted that the biotech ETF rose more than 10% the day after the election. Pfizer (NYSE:), seeing growth of 7.1%.
Conversely, hospitals such as HCA (NYSE:), LifePoint Health and Centena (NYSE:), which had been heavily tied to Obamacare, were down double digits on concerns about the potential repeal of the ACA.
Shares of traditional energy companies, led by coal producer Peabody, which jumped 50%, rose while alternative energy stocks sold off. Defense stocks also rose.
Analysts say trade-related issues have led to a fall in the Mexican peso and Kansas City Southern (NYSE:), a railroad company dependent on trade with Mexico. U.S. Steel shares, benefiting from the expected tariffs, rose 17%.
Analysts noted that small-cap stocks, including for-profit prisons and colleges, saw some of the biggest moves. Interestingly, gun stocks that were shorted in Clinton’s portfolio fell about 15% as the threat of gun control subsided, leading to an expected drop in gun sales.