Presidents are eager to take credit for any stock market gains under their watch, even though experts suggest who is in the White House makes little difference to overall performance.
That being said, the president and other branches of government certainly have the power to move markets, and that has been happening over the past few days as investors grew increasingly hopeful that Donald Trump would be elected president in November. President Joe Biden’s shaky debate performance and the Supreme Court’s decision upholding President Trump’s broad immunity from impunity moved the markets.
The story for the S&P 500 and other indexes hasn’t changed much. Big tech stocks are leading the way, but other stocks aren’t doing much better. Nothing new.
But the bond market is certainly shifting. Yields are rising, even though the latest inflation news has been encouraging. What’s more, longer-term bond yields are rising more than shorter-term bonds, narrowing the inverted yield curve of the past two years. This is because bond traders expect the Fed to set lower interest rates in the future than they do now. If they expect a second term for Trump to cause inflation, they may be changing their mind.
Why do we think so? Trump says he wants to cut taxes, which often leads to larger budget deficits and more government borrowing. His plans to raise tariffs, especially on imports from China, would also be inflationary. And his criticism of Federal Reserve Chairman Jerome Powell could make it even harder for the central bank to keep inflation in check.
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Certain sectors could benefit or lose if the Trump administration reshuffles. Steel companies, some health care stocks and banks that could benefit from less stringent antitrust enforcement could be among the sectors that could gain. Clean energy stocks could have a tougher time.
One thing is clear: politics is now a major market force.
—Brian Swint
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What will happen to clean energy if Republicans return to power?
Some investors are considering what would happen if former President Donald Trump wins this fall and is reinstated for a second term. A Republican return to power could mean major disruption for the clean energy sector, but it’s not all bad news, says Matt Breidert of sustainable investment firm Ecofin.
- Republican Administration May halt issuance of offshore wind permitsThis could be a blow to companies such as Orsted and Vestas.
.Breidert said renewable equipment stocks such as solar power supplier SolarEdge could also be hurt by changes to legislation and increased competition from China.
- Only a Republican sweep would be clearly negative for clean energy. A divided Congress or even a slim Republican majority would not lead to a complete repeal of the Anti-Inflation Act. Supporting clean energy initiativesDuring President Trump’s first term, Republicans held a slim majority but failed to overturn Obamacare.
- President Trump and the Republican Congress Eliminate some clean energy subsidies In an inflation-busting way, there are other factors boosting clean-energy stocks, such as rising demand for electricity from the technology sector for artificial intelligence and other uses.
- Solar and wind farms are probably Meet much of that demandThat’s because it’s cheap and quick to build: While it can take six years to build a new natural gas power plant, with sufficient transmission lines, a large solar farm can be built in less than two years.
What’s next: Electric vehicles may also do better than expected, despite Republican pressure to cut subsidies. Korean manufacturers such as Kia Motors, which are building electric vehicle factories in the U.S., are among the companies that would be hit if Trump were to withdraw government support for electric vehicles.
—Avi Salzman
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Pet Supplies Retailer Chewy Rides Meme Stock Roller Coaster
Pet supplies retailer Chewy was hit by a meme-stock frenzy after it revealed that Keith Gill (aka Roaring Kitty), a prominent Reddit chatroom trader, owns a 6.6% stake. Gill’s holdings were expected to spark the same speculative activity seen with other meme stocks such as GameStop.
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- Mr. Gill Holds 9 million shares Based on Monday’s closing price, Chewy’s shares would be worth roughly $229 million. The official regulatory disclosure comes after a cryptic message was circulated on X last week — no words, just a picture of a dog. The post sent Chewy’s shares soaring briefly.
- Chewy, founded by GameStop CEO Ryan Cohen, rose 18% after the filing was announced but closed down 6.6%. A true meme stock rollercoasterGill helped spark the meme-stock mania of 2021 with his bullish posts about GameStop. He recently reignited the meme-stock mania, also with GameStop.
- Chewy’s shares have risen 63% in the past three months after the company announced better-than-expected earnings and a share buyback program. May cast a shadow Analysts at William Blair see a fundamental recovery coming later this year.
- At GameStop, Cohen told X that the video game retailer Looking for Mobile App Developers Dallas, no college degree required.GameStop shares are up 33% so far this year and 94% in the past three months.Gill said in June he was buying up GameStop shares.
What’s next: Chewy’s stock price could become more volatile in the wake of Gill. The company is scheduled to report second-quarter results in August, when analysts expect earnings of 2 cents a share and revenue of $2.8 billion. The company’s annual meeting is scheduled to be held virtually on July 11.
—Adam Clark, Brian Swint, Janet H. Cho
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EU meta-platforms focus on targeted advertising
The European Union is targeting key revenue sources of Facebook and Instagram’s parent company MetaPlatform.
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The company says this violates the new Digital Competition Act. At issue is Meta’s policy that allows users to choose between paying a monthly fee for ad-free content or agreeing to Meta using their data for targeted advertising.
- The European Commission said on Monday that the choice would force European users of Facebook and Instagram to either consent to Meta combining their personal data or subscribe. Not personalized However, for those who don’t agree, there is an equivalent version of the Meta social network.
- Meta introduced an ad-free subscription model last year. Guidance from the European Supreme Court The company also said it was in compliance with EU digital markets law and reported first-quarter advertising revenue of more than $35 billion, about 23% of which came from Europe.
- DMA is a large digital platform Abusing your gatekeeping role “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” a Meta spokesman said. Barons By email.
- The EU last week
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Apple has not followed the DMA and the App Store has banned developers from selling apps to customers. Alternative ways to purchaseApple said it has made recent changes to comply with the DMA and is confident its plans comply with the law.
What’s next: Meth can then review the EU regulator’s preliminary findings and respond. If EU authorities determine that Meth violated the rules, the company could be fined up to 10 percent of its annual global turnover. The EU Commission said it will wrap up its investigation by the end of March.
—Janet H. Cho and Adam Clark
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Boston Celtics owner puts NBA champions up for sale
Just two weeks after winning their 18th NBA championship, the Boston Celtics announced on Monday that the team’s largest shareholder wants to sell the franchise for financial reasons. The sale price is expected to exceed the $4 billion paid for the NBA’s Phoenix Suns and WNBA’s Phoenix Mercury.
- Boston Basketball Partners, led by Wyck Grousbeck, said it plans to sell all and a majority stake in the team. This year or early 2025The remainder of the transaction will close in 2028. Grusbeck will remain as team president until 2028.
- Grousbeck led the group that bought the Celtics for $360 million in 2002. Other NBA franchises have been sold recently. Entrepreneur Mark Cuban Sold majority of shares From the Dallas Mavericks to the casino mogul family, the Adelsons.
- Forbes is the Celtics 4th most valuable team in 2023Prior to this most recent NBA title, the team had an estimated net worth of $4.7 billion, behind only the Golden State Warriors ($7.7 billion), New York Knicks ($6.6 billion) and Los Angeles Lakers ($6.4 billion).
- Sports team contracts Increased profitsand are attracting big Wall Street money. Carlyle Group co-chairman David Rubenstein bought the Baltimore Orioles for $1.7 billion in March, and Apollo Global Management co-founder Josh Harris bought the Washington Commanders for $6 billion last July.
What’s next: Before the owners announced their intention to sell, the team agreed to a four-year, $125.9 million contract extension with Derrick White, and continues to retain key players. ESPN reported that the Celtics’ total annual payroll, including taxes, could approach $450 million.
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—Janet H. Cho
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Join us this month in the Barron’s Daily Virtual Stock Trading Challenge and show us what you’ve got.
Every month, we launch a new challenge and invite you, our newsletter readers, to build a portfolio using virtual money and compete against the Barron’s and MarketWatch communities.
Everyone starts with the same amount of money and can trade as often or as little as they like. We will track the leaders and at the end of the challenge, we will announce the winner with the highest portfolio value in The Barron’s Daily newsletter.
Are you ready to compete? Join the challenge and pick your stocks here.
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—Newsletter editors: Liz Moyer, Patrick O’Donnell and Rupert Steiner
