Kamala's karma: How a Harris win could affect climate-oriented stocks (and others)

Facebook Tweet LinkedIn

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc. His climate columns have appeared in USA Today, The Independent and New Thinking magazine).

It was past midnight on Election Night 2016 when the first headlines
flashed across the nation declaring Donald J. Trump the next
president, and those of us watching the markets saw S&P 500 futures
promptly tank 700 points as investors around the world sold off. By
the time I made it to my office at TheStreet Inc. — only yards from
the New York Stock Exchange — it was almost dawn and the market had
recovered and was up hundreds of points.

No such whiplash is expected this time as investors know fully well
what each candidate offers. But if Vice President Kamala Harris wins
next week it is unlikely we’ll see a major short-term
rally. With markets already at record highs, it’s more likely
investors will initially consolidate gains as they fret about
Democratic spending and inflation, a potential split Congress, and of
course the inevitable Trump challenge to the results.

As reality sets in, though, a couple of themes will kick into place
that should guide continued gains as we move closer to the end of the
year. Yesterday, we looked at the impact a Trump victory might have.
Oil, defense, banking and tech stocks mostly.

Harris would bring another dynamic. Healthcare stocks, consumer and
homebuilding shares. And, very important, clean energy. Renewable energy
stocks have been in a pronounced bear market for more than two years
now, victims of higher rates and supply chain woes despite President
Joe Biden’s signature climate law, the Inflation Reduction Act.

As billions of federal dollars from that act start flowing, stocks in
wind, solar, battery and energy-efficient companies are expected to
stage a rebound, especially now with a lower rate environment. Think
companies such as First Solar and NextEra Energy. Also, electric vehicle stocks, such as Rivian and
the bigger automakers who are starting to see rebounds in EV sales,
such as General Motors and Ford. Finally,
infrastructure stocks could rise as Harris continues spending from the
Biden era on manufacturing and infrastructure repairs, so companies
like Caterpillar and Nucor.

The effect on Big Tech
One sector that might not benefit so well is tech, which could impact
the overall market, given the weighting of some of the tech giants on
the indexes. Though Harris is from San Francisco, adjacent to Silicon
Valley, and knows the community well, she is expected to keep up the
regulatory pressure on Big Tech. That will extend to the industry’s
surging demands for more power to fuel data centers for AI. There is
an energy crunch coming, and if government gets involved as it
inevitably will, that could slow the growth of some of the bigger AI
plays, such as Nvidia or Advanced Micro Devices.

Investors hate surprises. While the stated positions of the candidates
should spell out what to expect depending on who wins, the uncertainty
is really around how and when will we know who won.

Despite the market’s recent gains, investors are holding off on
pushing for a year-end rally until they get a definitive answer. The good news is that we are getting closer to that
day. It just might not be Nov. 5.