This morning is the last trading before the U.S. elections, so investors should expect sector volatility.
Trading Trump Media (DJT) stock is the most popular Trump trade. However, this is the riskiest speculation. DJT stock does not have the fundamental business strength to support its $6.12 billion market capitalization at a $30.56 share price.
DJT supporters are betting that the Republicans would slash government spending. That would hurt the defensive industry. In the last four years, military stocks like Northrop Grumman (NOC), RTX (RTX), Lockheed Martin (LMT), and L3 Harris (LHX) traded near their all-time highs. Those firms won U.S. military contracts.
In the Harris trade, speculators are betting on no changes to the current government priorities. In a Harris win, military stocks would continue their uptrend. Conversely, the government would reinforce its trade restrictions against China.
Due mostly to China cutting interest rates, loosening borrowing conditions, and stimulating its economy, Chinese stock markets rose in the last two months. EV firms like Li Auto (LI), Nio (NIO), and BYD (BYDDF) rebounded in that time. The market is pricing in the prospects of the Democrats retaining control.
Your Takeaway
Markets will reward speculators who bet on the outcome of the elections. Investors should wait until after tomorrow before committing more funds to the stock market.
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