Wining & Losing Sector ETFs Post Election Day
Zacks Investment Research | Nov 05, 2020 01:00AM ET
Chances of a dividend congress caused a superb rally in Wall Street the day after election.The contest for both the presidency and Senate has emerged tighter than expected. As vote counting started, the figures led market experts to believe that chances of a balanced government are high.
Without any "blue wave," where Democrats rule both chambers of Congress, possibilities became rife that pulling out existing policies and getting the new ones passed would be tougher, even if Democratic candidate Biden wins.
The likelihood of a dividend government means that too many changes on policies are less likely. The policies “will stay more moderate on the economy and taxes,” president of Wells Fargo (NYSE:WFC) Investment Institute commented, as quoted on nbcnews.com.
"The belief is that the Senate stays more balanced, and that balance keeps a gridlock — which prevents big changes to health care and the tax code ," said Darrell Cronk, president of Wells Fargo Investment Institute, as quoted on nbcnews.com.
As a result, the tech-centric Nasdaq was the main winner, having gained 5.8%, and outdoing the S&P (up 2.20%, which marks its QQQ lost about 6.3% on Nov 4.
The hope of the passage of a fiscal stimulus deal was probably another reason for the rally. Growth investing will also likely stay strong maintaining the ongoing trend. Against this backdrop, below we highlight a few sector ETF winners and losers on Nov 4.
h3 Winners/h3 h3 Technology /h3Tech companies did extremely well on the bourses in the past two years under the Trump administration and a dividend Congress. So, if there is a divided Congress again, tech companies should continue their wining momentum.
In fact, if Biden wins, tech companies should not fear. Biden’s running mate Senetor Kamala Harris is believed to have cordial relationships with the technological sector during her previous term as district attorney of San Francisco and attorney general in California.
The duo is believed to work on policies that will enhance the “accountability and transparency” of major technological companies instead of “breaking up business units,” per a ven though drug pricing and reimbursement reform have seen support from both Democrats and Republicans , we expect the Senate’s filibuster-proof, 60-vote supermajority requirement to pass major legislation will shield the biopharma industry from the most controversial reforms,” SVB Leerink Geoffrey Porges told clients in a research note, reports Bloomberg, as quoted on Aljazeera.com.
An analyst with Jefferies (NYSE:JEF) sees continued deal activity in the space. The Bloomberg report also highlighted that Goldman analyst Asad Haider mentioned the managed care sector is exposed to less risk of a “large progressive public option” or a corporate tax increase, if there is divided Congress.
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Cigna (NYSE:CI), Anthem (ANTM) and UnitedHealth (NYSE:UNH) gained double digits on Nov 4. iShares U.S. Healthcare Providers ETF KBE dropped 5.4% on Nov 4 on possibilities of more tough negotiations on fiscal spending that could result in a small-sized stimulus. This could cripple credit and lead to weaker economic activities and defaults on loans.
h3 Cannabis /h3Cannabis stocks started benefiting since Kamala Harris’ favorable comment during a debate with her Republican counterpart Mike Pence. She said that a Biden administration would decriminalize cannabis at a federal level in the United States. But a divided congress (if there is any) may not make the matter smooth, if Biden wins.
ETFMG Alternative Harvest ETF(MJ) lost 3.1% on Nov 4. However, the fund gained 2.2% after hours probably because “voters have approved ballot measures to legalize recreational marijuana in Arizona and New Jersey, and both recreational and medical use in in South Dakota”, Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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