As the U.S. presidential election draws near, Wall Street analysts are closely watching the outcome, bracing for various economic scenarios depending on whether former President Donald Trump or Vice President Kamala Harris wins. Each candidate’s victory could carry distinct economic implications.
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A Trump Win Could See Musk in the White House?
Beyond economic implications, an added element of interest arises if Trump wins: the potential involvement of Tesla’s CEO, Elon Musk, in the White House. In a move that caught everyone’s attention, Trump recently revealed that if re-elected, he intends to establish a government efficiency commission led by Musk.
At a Madison Square Garden rally for Trump on October 27, Musk introduced the idea of a minimum of $2 trillion in cuts to the U.S. federal budget. According to a Bloomberg report, this ambitious target exceeds annual Congressional spending on core government operations, including defense.
Which Are the Stocks that Could be Impacted by the Budget Cuts?
This proposal of budget cuts has led analysts at Piper Sandler to create a watchlist of stocks that might be impacted by such a drastic fiscal plan. The Bloomberg report cited this research, identifying major players like Boeing (BA) and General Dynamics Corp. (GD) as potentially facing significant market reactions. Piper Sandler’s list spans various sectors, including Moderna (MRNA) and FedEx (FDX). However, the outlook isn’t universally negative, as some of these sectors could see potential benefits.
For instance, according to Piper Sandler’s Chief Investment Strategist Michael Kantrowitz, aerospace and defense companies might gain from increased defense spending if a Republican victory also means a Congressional majority, creating a “positive skew” for certain stocks.
Furthermore, if Trump wins, Wall Street analysts expect companies with high revenue exposure to China could face increased volatility. This includes chipmakers such as Nvidia (NVDA) and Broadcom (AVGO), while traditional energy companies like Exxon Mobil (XOM) and ConocoPhillips (COP) may benefit from favorable oil and gas policies. On the other hand, a Harris victory could boost EV makers like Tesla (TSLA) and Rivian (RIVN) through expanded green incentives, and her housing plans could favor homebuilders like DR Horton (DHI) and Lennar (LEN).
Is TSLA Stock a Buy?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on 11 Buys, 16 Holds, and eight Sells. Over the past year, TSLA has increased by more than 10%, and the average TSLA price target of $207.83 implies a downside potential of 14.4% from current levels. It is expected that the U.S. elections could also impact TSLA stock.
