Tom Lee: Trump Win May Pressure Energy/Health, Boost Industrials

Key Takeaway

• Tom Lee predicts energy and healthcare stocks could face pressure if Trump wins the November elections, with a potential boost for industrials.
• Despite Middle East tensions, oil prices remain stable, impacting energy sector expectations.
• Political events like the U.S. presidential election continue to influence market dynamics and sector stability.

Election Uncertainty Shakes Markets

Fundstrat's Tom Lee highlighted the potential market volatility in anticipation of the November presidential elections, pinpointing energy and healthcare sectors as particularly vulnerable. Lee's analysis, shared on CNBC's "Last Call," suggests that a win for Donald Trump could lead to a downturn in these sectors, with a possible uplift in industrials. This speculation is grounded in the current subdued performance of oil giants like Exxon Mobil Corp. and Chevron Corp., which have seen significant drops, with the Energy Select Sector SPDR Fund (XLE) experiencing a 4.57% decline over the past month.

Energy Sector Under the Microscope

Despite geopolitical tensions in the Middle East, oil prices have not spiked as might be expected, which Lee notes could be beneficial for consumers but detrimental for the energy sector at large. This observation comes amid fluctuating oil prices that have seen offshore oddsmakers adjust President Joe Biden’s odds, reflecting the high economic stakes of energy sector stability for Americans, as underscored by the Pew Research Center. The market's response to recent tensions between Israel and Iran further illustrates the volatility and sensitivity of oil prices to international events, transitioning from war fears to a state of calm.

Healthcare and Industrials on the Radar

Lee's commentary extends beyond energy, suggesting that healthcare stocks could also face pressure in the event of a Trump victory, while industrials might benefit. This bifurcation in sector performance underscores the broader market's sensitivity to political developments, particularly presidential elections, which historically have had a significant impact on market dynamics and investor sentiment.

Street Views

• Tom Lee, Fundstrat (Neutral on the market with specific views on sectors):

  "I think energy stocks would come under pressure. I think healthcare would come under pressure as well. And you should see a commensurate lift in industrials." "Lower oil is great for consumers but it does mean lower prices for oil and it wouldn’t be great necessarily for the energy complex."