Though the S & P 500 is up more than 20% in 2024, Evercore ISI sees a patch of volatility ahead as the November presidential election approaches — and the firm has stocks to play either outcome. Ahead of the vice-presidential debate on Tuesday evening, Evercore ISI released a list of stocks that would outperform based on whether Democratic nominee Kamala Harris or Republican nominee Donald Trump becomes president. Evercore senior managing director Julian Emanuel thinks that a divided government — that is, when the presidency and both houses of Congress are controlled by different parties — could actually boost stocks in 2025, contrary to popular belief.
"Despite the potential for Divided Government to further exacerbate divisions in 2025, for investors, 'It Is Different This Time,'" he wrote. "While a century of returns shows that United government handily outperforms Divided, the sharp partisan divides in the Country make 2025 a year where stocks are more likely to outperform in the event that government is Divided, as is currently the case." Broadly, Emanuel thinks that renewable and electric vehicle stocks would outperform if Harris wins, since those names would benefit from clean energy policies.
Health insurers that are leveraged to the Affordable Care Act could also rally on the back of a push to boost enrollment. But financial stocks, utilities with exposure to gas and coal, prescription drug companies and Medicare Advantage-leveraged insurance names could declin.