Kamala Harris changes the pace for investors who were betting on a Trump victory

The stock market session that followed the assassination attempt on Donald Trump on July 14 marked a new scenario for many investors. The Republican candidate emerged almost unscathed after being shot, and the image of Trump with his fist raised and traces of blood on his face went around the world. Few doubted at the time that this powerful snapshot would multiply his chances of victory against a physically weakened Joe Biden who was losing internal support day by day following a disastrous debate. The companies that in theory stand to benefit most from a Trump victory — private prison operators such as Geo Group and CoreCivic, gun manufacturers like Smith & Wesson Brands and Sturm, Ruger & Co, the bitcoin industry, and the Republican candidate’s own media empire, Trump Media, immediately reflected this with increases in their share prices.

The party was ready... until Kamala Harris showed up. Her nomination at the top of the Democratic ticket following Joe Biden’s withdrawal from the race has reduced Trump’s options. Her rival has lagged behind in the polls in the last three weeks: according to polls by the aggregator RealClearPolitics (RCP), Harris now has a 48.4% chance of winning the presidency, compared to 46.9% for Trump. And caution, if not fear, has gripped those who had put their money into stocks sensitive to a Trump defeat. That fear is more than just a perception: the investment bank Goldman Sachs has prepared two stock indexes, one that would benefit from Trump’s policies and another that would do the same with Harris’s, and their evolution in the stock market to Tuesday could not be more revealing: while the Democrat’s shares rebounded 6% since Biden’s departure, those of the Republican fell 4% in a curve that has followed opposite trends.

There has been a lot of talk in the last month about the so-called Trump Trade, or what amounts to investing in the companies that would benefit from a new Trump term. Goldman’s list of stocks includes oil companies such as Exxon and Chevron — benefited by Trump’s climate denialism and his refusal to reduce the use of fossil fuels — U.S. car manufacturers such as General Motors and Ford, which he would help in the face of foreign competition, especially from China; large pharmaceutical companies, private health insurers, private education institutions, banks and the aforementioned arms and prison companies. The newest sector that Trump is shamelessly courting is cryptocurrencies: he attended a crowded industry event in Nashville, and his records state that he owns between $1 million and $5 million in ethereum, the second most important cryptocurrency after bitcoin.

Much less has been heard about the Harris Trade. Here, analysts place renewable energy companies, infrastructure, electric car manufacturers and companies exposed to China that would be spared from the foreseeable escalation of the trade war with Trump’s protectionist policies. On the Goldman Sachs list, firms such as Enhpase Energy, in the solar energy sector, retail chains Kohl’s and The Gap, and electric car manufacturers Rivian and Lucid appear as potential winners if the Democrats win the White House.

It is a paradox that one of the most active billionaires in defense of Trump, the controversial Elon Musk, founder of Tesla, would theoretically have more reasons to support Harris’ electric vehicle promotion policy. On the campaign trail Trump has issued contradictory statements about EVs. First he attacked them, and even floated the idea of ending public subsidies for their purchase, and then, perhaps because of Musk’s growing influence, he called them “incredible.” However, Musk’s foray into politics, positioning himself against immigration, predicting a civil war in Europe, and already sounding like a future Trump advisor if Trump wins in November, seems to have much deeper roots than the Republican’s greater or lesser aversion to the electric car.

Trump has traveled a similar path with bitcoin as he did with the electric car: in 2021 he said it was a fraud and that he did not like it because it competed against the dollar. Now, with cryptocurrency investors turned into a lobby of 50 million potential voters that has showered $119 million in donations on the campaigns of pro-crypto candidates, his opinion has turned around. At the Bitcoin 2024 event in Nashville in July he promised to create a federal strategic reserve of bitcoin and to fire Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), the man who has tried hardest to regulate the sector, and therefore the most hated by crypto-believers. Since those remarks, bitcoin has lost 12%.

The Democratic candidate has been much more discreet about her views of the crypto sector, which Joe Biden never got along with. Despite her low profile, members of Harris’ team have met with some big crypto entrepreneurs, but she avoided going to Nashville, where she was invited, and has not touched on the issue in her speeches, possibly because she has much to lose and little to gain by putting the matter at the center of the debate with Trump devoted to the crypto cause.

One of the proposals that may cause the most concern on Wall Street is increasing the corporate tax rate from the current 21% to 28%. In 2017, Donald Trump undertook the biggest cut in recent history, lowering it 14 points from 35%. Now, Harris aims to recoup some of that revenue with the goal of getting large corporations to contribute more and creating new opportunities for the middle class. It won’t be that simple: a victory without control of both houses of Congress would limit her room for maneuver.

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