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 sector-specific moves.
The investment firm said financial institutions, especially banks and insurance companies, led the way with significant gains. Sallie Mae rose 37% and Freddie Mac rose 97% within seven trading days.
Bonds and bond proxies, such as utilities and REITs, sold off as investors anticipated an expansionary fiscal package and lower corporate tax rates, analysts said.
The healthcare sector, especially the pharmaceutical and biotech sectors, rallied. Analysts noted that the biotech ETF rose more than 10% the day after the election Pfizer (NYSE:) sees an increase of 7.1%.
Conversely, hospitals like HCA (NYSE:), LifePoint Health and Centene (NYSE:), which were heavily tied to Obamacare, fell double digits on concerns about a possible repeal of the ACA.
Traditional energy stocks, led by coal producer Peabody, which rose 50%, rose while alternative energy stocks sold off. Defense stocks also rose.
Analysts say trade-related issues caused the Mexican peso and Kansas City Southern (NYSE:), a railroad that relies on trade with Mexico, to fall. US Steel, which benefited from expected tariffs, rose 17%.
Analysts noted that small-cap stocks, including prisons and for-profit colleges, saw some of the biggest moves. Interestingly, gun manufacturers, who shorted Clinton’s portfolio, fell about 15% as the threat of gun control subsided, leading to an expected drop in gun sales.
