Yahoo Finance 5 Investments That Could Plummet in Value With a Biden Reelection in 2024
Despite a nationwide Reuters poll showing that two-thirds of Americans were “tired of seeing the same candidates in presidential elections and want someone new,” it seems all but inevitable that the November contest will once again pit President Biden vs. former President Trump.
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In one sense, this can be a plus for investors, as they’ll have to focus only on the policy goals of two candidates, rather than an entire field battling for their party’s nomination. As each candidate already has served as president, investors have firsthand knowledge of their legislative priorities, making it easier to pinpoint which areas of the market might benefit — or suffer.
Although presidents can change policy at any time, and many forces beyond the federal government affect stock prices, here are some of the stocks that might have a harder time if President Biden is reelected in 2024.
Large-Cap Pharmaceutical Companies
Large-cap pharma companies have long been in the crosshairs of the Democratic Party at large, and that includes President Biden.
The White House itself released a memo on Feb. 1, 2024, entitled “President Biden Takes On Big Pharma and Is Lowering Prescription Drug Prices,” indicating how much of a priority this agenda is for the president.
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While there’s no way to know whether Biden will get any of his agenda through Congress or how drug companies may be directly affected, it’s clear that the Biden administration is set on a path that would make business more difficult for big pharma. This could potentially limit price gains in the sector.
Big Tech
Just like the Biden administration has demonstrated its willingness to throw up roadblocks for big pharma, it has similarly acted as a watchdog for Big Tech, particularly when it comes to privacy and security.
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In his 2023 State of the Union address, for example, Biden said, “It’s time to pass bipartisan legislation to stop Big Tech from collecting personal data on kids and teenagers online (and) ban targeted advertising to children.”
This is just one example of how the Biden administration has clashed with Big Tech, and it’s likely to continue in the future. Biden’s reelection might not be enough to tank tech stocks, but it will likely provide them with continuing headwinds.
Financials
Financial services is another industry that has been a target of the Biden administration, just like big tech and pharma.
On Oct. 11, 2023, for example, the White House released a memo titled, “Biden-Harris Administration Announces Broad New Actions to Protect Consumers From Billions in Junk Fees.” In April 2023, the administration considered tougher regulations against the money market and hedge funds.
The bottom line is that the Biden administration is generally in favor of more regulation of the banking and financial industries, and reelection will likely see a continuation of these policies.
Traditional Energy Companies
Clean energy has been one of the legislative priorities for the Biden administration since the campaign trail, and it naturally brings the president into a somewhat adversarial relationship with traditional oil and gas companies. The Inflation Reduction Act, despite its name, was in large part climate change legislation, designed in part to slash offshore gas and oil leasing.
But oil production under Biden has ramped up to record levels. The president’s real bone to pick with oil companies may not be in their production — which helps keep gas prices lower and may help him remain in office — but with what they do with their profits.
As Biden said in his 2023 State of the Union address, “They invested too little of that profit to increase domestic production and keep gas prices down. Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders.”
The Broad Market
The S&P 500 index rallied sharply when Biden was initially elected in 2020, posting the biggest 100-day gain of any president since the Eisenhower administration in the 1950s. But it could be argued that a large part of this gain was due to the massive coronavirus stimulus programs already underway, along with the subsequent boom in the American economy.
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Although the market soared in 2021 and 2023, it suffered a 25% loss at one point in 2022. The result is that overall, the first-term stock market results for Biden have been a bit lacking, especially when compared with Trump’s first term.
Although Biden still has nearly a year to improve his results, the S&P 500 was up just 25.9% from the start of his term to the end of 2023, vs. the 67% the market returned during Trump’s full first term.
The Bottom Line
The bottom line is that predicting what specific industries or the broad market may do if Biden is reelected is an educated guess at best. Most pundits didn’t expect the market to skyrocket like it did the first 100 days of Biden’s presidency, and not many are predicting the same in November.
But as the market doesn’t like surprises, it may be happy to stick with the status quo if Biden is reelected. However, potentially higher taxes and business regulations could hamper corporate profits in some sectors and keep S&P 500 returns dampened going forward.
Geopolitical influences, inflation and interest rates are all factors that influence stocks even more than whether or not Biden recaptures the White House in 2024, so keep these in mind when building or adjusting your portfolio.
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This article originally appeared on GOBankingRates.com: 5 Investments That Could Plummet in Value With a Biden Reelection in 2024
