YUGE MOVES

Guns, germs, and steel: The companies winnng and losing from Donald Trump’s victory

Obsession
2016
Obsession
2016

Investors are sending a signal about Donald Trump’s campaign promises: We believe.

Markets have steadied from an overnight tumble that kicked off when the Republican nominee began to morph into the president-elect of the United States. But drama is gripping some very particular sectors: pharma, guns, steel and coal.

Coal and steel producers surged. Trump pushed aggressively into US coal country, which he handedly won and has complained about cheap foreign steel and aluminum undercutting US producers, despite questions about supplies used to build Trump-branded hotels. US Steel shares jumped more than 14%. Coal producer Alliance Resource Partners rose 12%. Aluminium producer Alcoa rose nearly 5%.

Trump has also promised to spend big on infrastructure, sending shares of construction companies and equipment makers higher. For example, Caterpillar shares rose more than 6%.

Drugmakers also surged. Shares of pharmaceutical companies had plunged last year following comments from Democratic nominee Hillary Clinton on price gouging in the sector. Pfizer rose 7% and Merck gained 3.4%.

But gun shares tumbled as Trump’s victory all but scraps the chances for significant curbs on sales. Smith & Wesson shares shed nearly 12% by mid-morning trade; Sturm, Ruger fell close to 13%. These stocks often rise on the heels of mass shootings, such as the Orlando nightclub shooting in June, since such acts of violence drum up worries of stricter rules governing gun control, a shift that could cause consumers to stockpile weapons. One of Trump’s biggest supporters has been the National Rifle Association.

Gun sales surged, to two million a month (paywall), following Barack Obama’s re-election and the Sandy Hook massacre.

Do keep in mind: the day after the election is a day for knee-jerk reactions. Without a highly-detailed plan on how Trump will follow through on these promises, these sectors could easily turn.

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