Since Election Day, numerous stocks have shown remarkable double-digit returns. This phenomenon is largely attributed to a combination of expected policy stances from the incoming Trump administration and positive quarterly earnings reports. Experts believe that President-elect Donald Trump is likely to back deregulation and adopt a less stringent stance on mergers and acquisitions. One analyst even mentioned that Tesla stock received an “Elon Musk premium.”
Uncover the Reasons Behind Stocks' Post-Election Surge
Policy Stances and Stock Performance
Investment experts state that lofty stock returns were partly driven by the policy stances expected to benefit certain companies and industries under the Trump administration. Deregulation and a softer view toward mergers and acquisitions are two key themes that have fueled bullish sentiment. For instance, Jacob Manoukian, head of U.S. investment strategy at J.P. Morgan Private Bank, emphasizes the significance of these policies.Moreover, U.S. regulators are likely to be less stringent about allowing potential mergers during Trump's second term. Companies in the streaming ecosystem, such as Warner Bros. Discovery and Disney+, may benefit from looser rules around consolidation. This shows how different sectors can be impacted by the expected policy changes.Quarterly Earnings and Stock Outperformance
For some stocks, outperformance was closely tied to rosy quarterly earnings results or guidance reported around or after Election Day. Many businesses cited artificial intelligence as a growth driver. Take Palantir Technologies, for example. Treasurer and CFO David Glazer told investors in November that there was “unprecedented” demand for its AI platform, which led to “exceptionally strong” earnings.Axon also beat analysts' estimates in its November 7 earnings results, with officials touting its “AI era plan” and raising earnings guidance. Axon and Palantir stocks saw significant increases during the same period. Some companies even benefited from a combination of policy and earnings.Energy Provider Vistra and the AI Revolution
Take Vistra Corp., an energy provider. After Election Day, its stock jumped 27%. Stacey Doré, Vistra's chief strategy and sustainability officer, mentioned that the company is in talks with large data centers in Texas, Pennsylvania, and Ohio to build or upgrade gas and nuclear plants. As tech companies are building more data centers to fuel the AI revolution, they need a significant amount of energy. This shows how the AI trend is influencing various sectors.The Elon Musk Factor and Tesla's Success
Goldberg of Professional Advisory Services pointed out that Tesla's stock got an “Elon Musk premium” from Trump's victory. Musk, as Tesla's CEO, was one of Trump's top campaign backers and was tapped to co-lead a new Department of Government Efficiency. Shares of the electric-vehicle maker soared 14% on the day after the election and almost 30% by the end of the week.In addition, Tesla has been developing technology for driverless vehicles. In its recent earnings call, Musk said he would use his influence in the Trump administration to establish a “federal approval process for autonomous vehicles.” This shows how Musk's influence and the company's technological advancements are contributing to its success.