What are the Trumpiest firms? One way to answer the question is by looking at companies in the president’s orbit, such as Tesla, owned by Elon Musk, his billionaire adviser, or the eponymous Trump Media & Technology Group. Another way is to look at firms that saw their prices surge the day after Donald Trump’s election victory, when the biggest gainers included Palantir, a defence contractor; Apollo Global Management and Capital One, two financial giants; and yes, Tesla.
Since then, the S&P 500 index has peaked, in February, and then fallen by more than 8%. In light of Mr Trump’s many tariff announcements, and seeming disregard for the stockmarket’s poor performance, this is unsurprising. What is more surprising is that even the firms investors had expected to thrive under the new administration are struggling.
Consider the performance of two baskets of stocks: one formed of “Trump winners” (the 43% of the S&P 500 that outperformed the index after his election victory); the other made up of “Trump losers” (the 57% that underperformed). In the weeks following the election, the winners remained up by about 8% against the losers. Since then, the dynamic has switched. Indeed, the gap between over- and under-performers has now closed (see chart).
This is different from Mr Trump’s first term, when early beneficiaries, including banks and defence firms, continued to perform well. After the recent election, investors had thought the president would hold off on tariffs until he had introduced tax cuts, which would have lifted corporate earnings. Instead, his immediate tariff enthusiasm has hurt early winners in industrials and the consumer sector, which had been expected to benefit from deregulation and economic growth, and now face trade woes and policy uncertainty. Tech firms, which also soared early on, have been brought down by a sell-off sparked by China’s artificial-intelligence progress. Meanwhile, Tesla is suffering from its association with Mr Trump, as European consumers eschew its vehicles.
Other putative Trump darlings present a mixed picture. Bitcoin—buoyed by the president’s engagement with the crypto crowd and his promise to create a “strategic crypto reserve”—remains well above its pre-election price. So do security-related firms such as CoreCivic and The Geo Group, a pair of private prison managers, and Palantir. The same cannot be said about Trump Media & Technology Group, shares in which began to tank well before news about tariffs. Either investors have lost faith in Mr Trump’s ability to deliver for his favourites, or the nature of Trump-friendly stocks has fundamentally changed.■
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