With less than a week to go before US president-elect Donald Trump’s inauguration, investors are gearing up for his return to the White House.
Trump is due to be sworn in for his second nonconsecutive term as US president on Monday 20 January.
Much of the market focus since the start of January has been around concerns of persistent inflationary pressures and that this might prompt central banks to slow down their pace of interest cuts.
As part of these broader concerns, investors have been weighing how inflationary Trump’s proposed policies on trade tariffs and tax cuts could prove if implemented.
Bloomberg reported on Monday that members of Trump’s incoming economic team were discussing slowly ramping up tariffs month by month, to help avoid a jump in inflation. A spokesperson for Trump had not responded to Yahoo Finance UK’s request for comment at the time of writing.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Some of the turmoil we’ve already seen on financial markets is likely to continue as speculation swirls about Donald Trump’s trade policies once he’s back in the White House.
“There’s inevitably a lot of focus on what the impact could be for the global economy when higher tariffs are introduced. UK investors should brace for some volatile patterns of trading on the financial markets.”
However, Streeter added that it’s “important to remember that investing takes endurance and patience and that the stock market has historically risen over the long term”.
Markets rallied following Trump’s election victory in November, with the S&P 500 (^GSPC) topping the 6,000 points mark for the first time in the following week.
Certain stocks that moved with Trump’s election odds in the run up to the vote rose following his win, in what became known as the “Trump trade”.
Here’s how they are performing as investors count to down to the inauguration.
Shares in Trump Media surged nearly 22% on Monday, marking the strongest day for the shares since late October, in the days before the election.
Trump had been the biggest shareholder in the company behind his social media platform Truth Social and said shortly after the election that he had no intention of selling his shares in the firm.
Trump transferred his $4bn (£3.27bn) stake in Trump Media to a revocable trust in December. According to securities filings, he is the sole beneficiary of the trust, and his son, Donald Trump Jr is the sole trustee.
The stock eased back in Tuesday’s session, falling 8% to a closing price of $39.35 per share, which is much higher than its low of $12.15 in October but still below its peak closing price of $66.22 the day after its market debut in March.
NasdaqGM – Delayed Quote • USD
39.35 – (-8.30%)
At close: 14 January at 16:00:01 GMT-5
Electric carmaker Tesla has had a strong run since the election, with CEO Elon Musk’s relationship to Trump helping drive the stock to a fresh record high in December.
Tesla CEO Elon Musk was a major supporter of Trump’s campaign and has been appointed to co-lead the newly-created extra-governmental Department of Government Efficiency (DOGE).
Musk and his co-lead, former Republican presidential candidate Vivek Ramaswamy, initially said they were aiming to cut $2tn from the federal budget. However, Musk admitted last week that figure may be the “best-case outcome”.
Musk, who is the richest person in the world, has also been in the spotlight over the past week for intervening in British politics. The billionaire has been using his social media platform X to attack prime minister Keir Starmer and the Labour government over their opposition to another national inquiry into grooming gangs.
Meanwhile, it was reported on Tuesday that the Securities and Exchange Commission (SEC) had filed a lawsuit against Musk claiming that the billionaire did not properly disclose his growing stake in Twitter, which he later renamed X. The SEC alleged that Musk waited too long to disclose his stake, enabling him to underpay for shares by at least $150m (£123m), according to a Bloomberg report.
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Shares in Tesla dipped nearly 2% on Wednesday, though the stock is still up 81% over the past year, as investors remain bullish on the stock.
Dan Coatsworth, investment director at AJ Bell, said: “Being in Trump’s inner circle has elevated Elon Musk’s profile on the world stage and encouraged investors in his electric vehicle company to believe Tesla will get preferential treatment from the new administration.
“While Trump comes across as an anti-green leader, he is also expected to loosen regulations and that could benefit Tesla’s quest to roll out self-driving technology,” he said. “Trump is expected to cut federal subsidies for electric vehicles – at face value, that’s not good for Tesla, but it could be even worse for its smaller, weaker competitors.”
Last week, Bank of America analyst John Murphy boosted his price target on the stock from $490 to $400. However, he also downgraded his rating on Tesla from “buy” to “neutral”.
Murphy said that “execution risk is high and TSLA is trading at a level that captures much of our base case [long-term] potential from core autos, robotaxi, Optimus, and energy generation & storage.”
NasdaqGS – Delayed Quote • USD
396.36 – (-1.72%)
At close: 14 January at 16:00:00 GMT-5
Bitcoin (BTC-USD) soared following Trump’s election win, topping $100,000 for the first time in November, as investors eyed more accommodative policies for the cryptocurrency.
Trump said in his election campaign that he planned to make the US the global capital for cryptocurrency and he’d create a national stockpile of bitcoin.
Shares in cryptocurrency exchange platform Coinbase, which is consider a proxy stock for the digital tokens, soared following the election. The stock has since eased back but is still up 95% over the past year.
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Investment platform Robinhood (HOOD) found that along with Tesla and Trump Media, Coinbase was also among the top 10 stocks bought on its UK platform in 2024.
Dan Lane, lead analyst at Robinhood UK, said: “Crypto fans were finally able to come back out of the shadows last year, with Bitcoin’s record rise coinciding with incoming president Trump’s support for the sector.
“With pro-crypto advisors like Elon Musk and SEC lead Paul Atkins in place, the new administration looks likely to usher in a much friendlier four years for crypto fans.”
NasdaqGS – Delayed Quote • USD
255.37 – (+1.66%)
At close: 14 January at 16:00:02 GMT-5
Data analytics software company Palantir is another stock that became considered a Trump trade, following its post-election rally.
The stock is up 293% over the past year alone, with shares jumping as investors bet on higher defence spending as Trump returns to power.
Joe Tigay, portfolio manager at Rational Equity Armor fund, told Yahoo Finance last week that he picked Palantir, Tesla and e-commerce giant Amazon (AMZN), as his three stock picks that could gain under Trump’s second term.
Tigay described Palantir as “the software innovation of the AI world.” He said that the company had a significant run-up after the election, receives a lot of government business, and has the right products to “put AI to work.”
NasdaqGS – Delayed Quote • USD
65.91 – (+1.43%)
At close: 14 January at 16:00:00 GMT-5
Musk is not the only CEO of a Magnificent 7 tech behemoth looking to forge closer ties with Trump ahead of his return to office.
Meta CEO Mark Zuckerberg appears to be trying to a build a stronger relationship with Trump, as the social media company is one of the major tech firms that has committed $1m to the president-elect’s inaugural fund.
Meta also announced last week that it had appointed Ultimate Fighting Championship CEO Dana White, who campaigned for Trump, as one of three new board members. In addition, Meta said it was scrapping its US fact-checking programme on Facebook and Instagram.
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Dan Ives, managing director at Wedbush Securities, said Nvidia (NVDA), Microsoft (MSFT), Tesla, and Alphabet (GOOGL) were among his top five “tech winners” for 2025.
Ives wrote in a note to clients: “We expect tech stocks to be up 25% in 2025 as the Street further digests a less regulatory spider web under Trump in the White House with Khan/FTC days in the rear-view mirror, stronger AI initiatives within the Beltway on the way, and a goldilocks foundation for Big Tech and Tesla looking into 2025 and beyond.”
More broadly, AJ Bell’s Coatsworth said the US stock market had “initially responded favourably to the election result last November but recent headwinds have curtailed some of the Trump-related gains.”
The S&P 500 is now trading 1.2% higher than on election day, Coatsworth said, while the more tech-focused Nasdaq (^IXIC) is 3.7% in the green.
“Initial euphoria was driven by investors locking onto the fact Trump is pro-business and is expected to cut taxes and have looser regulation, potentially giving a boost to corporate profit margins and driving greater share buybacks,” he said.
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“There is a big risk that investors have now priced in a lot of potential good news and that markets don’t do as well once Trump is back in power.”
Looking ahead, Coatsworth said that analysis by AJ Bell of market performance during previous campaigns since 1949 found US stocks can be “slow movers” in the first year of a Republican presidency, rising an average of 2%.
However, performance was much stronger in the second and third years, up 11.8% and 14.8% on average respectively, with just a 0.2% rise in the fourth year.
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