Stocks in the US react differently to Trump's first official day as president
Tesla, prison operators, and other "Trump trades", were volatile Tuesday as investors analyzed a flurry of executive orders issued by President Donald Trump just hours after taking his oath.
Trump announced his plans to increase oil production, reduce immigration and impose tariffs on Monday as he began his second term as president of the United States.
Investors braced themselves for increased volatility under Trump 2.0 as some "Trump Trades", or bets about what the president will say, rose on Monday while others fell.
TRUMP MEDIA & TECHNOLOGY GROUP
After a successful run up to the inauguration, shares of Trump Media & Technology Group (parent of President Trump's streaming and social media company Truth Social) dropped by 11.7%.
Retail investors who bet on Trump’s presidency are facing stiff competition from the newly launched "memecoin", which has seen its value soar to over $15 billion just one day after it was launched.
Michael Schulman is the chief investment officer of Running Point Capital.
ELON MUSK, TESLA'S LEADER
Tesla shares fell 2.8% on Monday, wiping out its gains before the market opened. Stocks have risen 70% since the presidential election on November 5, as investors placed their hope in Elon Musk, CEO of Tesla and his growing relationship with Trump.
Musk, who praised Trump's return to White House during a speech at the President's inauguration, on Monday, is now heading the Department of Government Efficiency. This panel will be tasked with cutting government spending.
ENERGY FIRMS
Trump declared on Monday that "we will drill, baby, drill" as part of a plan for maximizing U.S. production of oil and gas by declaring an energy emergency and removing excess regulations. He also announced the withdrawal of the U.S.
Schlumberger and Kinder Morgan both saw their shares rise by 1.7%.
NUCLEAR STOCKS
Investors cheered Trump’s selection of Chris Wright as energy secretary. Wright has pledged to prioritise the production of liquefied gas and nuclear power as part of his plan for boosting U.S. output.
Vistra rose 4%, NuScale climbed 10% and Oklo Inc, a nuclear startup backed by Sam Altman, gained 12.4%.
Prison Operators
The shares of GEO Group, which operates immigration detention centers, and CoreCivic fell less than 1%. This reversed their premarket gains. Stocks in the companies posted double-digit growth last year, on the expectation that Trump's crackdown against illegal immigration would lead to more business.
Trump declared a state of national emergency along the U.S. Mexico border, and he is targeting automatic citizenship to children born in the U.S. who are the offspring of illegal immigrants.
U.S.-LISTED CHINA STOCKS
American depositary stocks of Chinese companies gained a boost after Trump held back on imposing heavy duties on the second largest economy in the world. This was an unexpected decision, as he had threatened 60% levies against Chinese goods during his campaign.
Alibaba Group Holding shares gained 0.6% while the broader iShares MSCI China ETF increased by 0.4%.
CRYPTO STOCKS
As bitcoin's rally continues, shares of blockchain and cryptocurrency-related companies have fallen.
Cooling
After hitting a new record of $109 071, Trump's initial set of policies did not mention the asset class.
Coinbase Global, a crypto exchange, shed 3.6%. Marathon Digital and MicroStrategy, on the other hand, dropped 1.7% and respectively 3.9%. (Reporting from Medha Singh in Bengaluru, Ananya Marym Rajesh for additional reporting; editing by Anil D’Silva).
(source: Reuters)
