Investors have been pumping US stocks into their portfolios over the last few months ahead of the US election, with stocks like Tesla, Nvidia, Trump Media and Microsoft faring well.
Overall, the US stock market responded exuberantly to news that Donald Trump had won a second term in the White House. The S&P 500 gained 2.5% on 6 November, the day the election result was announced, and tipped over 6,000 points for the first time in its history over the following days.
Dan Coatsworth, investment analyst at AJ Bell, cites data from the firm’s platform that shows trading volumes on the day were double their average levels and that buy and sell trades tripled their average value.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This tallies with data from the stock market more generally. Trading volumes for the S&P 500 reached 6.3 billion on the day, their highest level since 20 September.
Top 10 most traded US shares on election result day
These are the 10 most-traded US stocks
- Tesla
- Nvidia
- MicroStrategy
- Palantir
- Coinbase
- Amazon
- Trump Media
- Super Micro Computer
- Microsoft
- MARA Holdings
Source: AJ Bell, 6 November 2024. Based on net trades.
Tesla was the most-traded stock, but more people sold it than bought it on AJ Bell’s platform.
“Bears might have taken the view that Trump will be the anti-green leader of the Western world, rolling back elements of the Inflation Reduction Act”, says Coatsworth. The IRA, as it is usually known, was intended to promote clean energy businesses and provides a tax credit to US-based electric vehicle firms. Tesla could lose out on this if Trump were to cut this credit, as he has previously indicated he might.
However, on 12 November Trump confirmed that Tesla’s CEO Elon Musk will be appointed to a role in his administration, heading up the proposed Department of Government Efficiency alongside former Republican presidential candidate Vivek Ramaswamy.
Musk now has “a ring-side seat and has Trump’s ear” which could lead to benefits for Tesla and his other companies. No surprise, then, that Tesla’s share price gained 14.8% on election day; while more AJ Bell customers sold than bought, the market clearly views the outcome as positive for Tesla.
Trump’s bitcoin bounce
Other notable inclusions in the top ten traded stocks on election day are Coinbase (NASDAQ: COIN), MARA Holdings (NASDAQ: MARA) and MicroStrategy (NASDAQ: MSTR).
For investors not familiar with these, all are closely associated with bitcoin – an asset class that Trump was keen to promote his affinity for during the election campaign.
Coinbase is one of the world’s largest cryptocurrency exchanges, while MARA is one of the largest bitcoin miners.
BI software house MicroStrategy was co-founded by Michael Saylor, a prominent bitcoin advocate. In 2020, Saylor began adding bitcoin to MicroStrategy’s balance sheet as a hedge against inflation; now, MicroStrategy is the largest corporate holder of bitcoins.
Consequently, its share price is now correlated with bitcoin’s price moves (though, because it leverages its purchases using debt, MicroStrategy’s moves are often even more extreme than bitcoin’s).
During the campaign, Trump promised to make America ‘the crypto capital of the planet’ and to build a strategic reserve of bitcoin. Bitcoin gained over 9% on 6 November and is today trading at all-time highs of over $90,000.
MicroStrategy gained 12.9% on 6 November and added nearly 40% more since then.
Mixed picture for Nvidia
Nvidia (NASDAQ: NVDA), uncharacteristically, saw one of the more reserved price movements among the most-traded stocks on election day, gaining a comparatively modest 4.1%.
While a Trump presidency is expected to be good news for the tech and AI sector that Nvidia serves, the geopolitical implications of his return to the Oval Office complicate matters.
The risk to the investment case in Nvidia “has grown exponentially after Trump was re-elected”, says Coatsworth. Nvidia is dependent on Taiwan Semiconductor Manufacturing Company (NYSE: TSM) for its chip components, but China has threatened to invade Taiwan on multiple occasions.
Trump, meanwhile, has previously spooked semiconductor stocks by indicating that he would make Taiwan pay for US protection. If Taiwan refuses to do so, Nvidia’s supply chain could come under threat.
Did Trump’s win surprise investors?
Data on the number of shares sold indicates that investors may have been caught off guard by the outcome.
6 November saw two-thirds as many sell trades as buys for US-listed stocks across AJ Bell’s website and app.
“That suggests investors were either spooked by the election result or they felt they had made the wrong trade ahead of the event,” says Coatsworth.
However, while investors using AJ Bell’s platform may have misjudged the result, the gains made by the S&P 500 as a whole suggest that the stock market has welcomed the result.
-
Pensioners to pay “retirement tax” within three years, according to state pension forecastsThe state pension is set to reach £12,592 by 2027, meaning it will exceed the tax-free personal allowance. We look at the latest forecasts, and how frozen tax thresholds affect retirees
-
DCC: a top-notch company going cheapDCC has a stellar long-term record and promising prospects. It has been unfairly marked down
