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Fundstrat’s Tom Lee on Wednesday weighed in on the possibility of the market factoring in Donald Trump’s potential win in the upcoming November elections.
What Happened: Lee, during CNBC’s “Last Call,” suggested that investors should pay attention to two sectors that could be pressurized by the November presidential election results: energy and healthcare.
“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,” Lee said.
Lee also observed an unexpected trend in the energy sector. Despite rising tensions in the Middle East, oil prices are not escalating as anticipated. “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,” he said.
Why It Matters: Lee’s concern comes amid subdued earnings reports from oil giants like Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX). As a result, the Energy Select Sector SPDR Fund (NYSE:XLE) saw a significant drop, marking a 4.57% drop in the past month.
Political events, such as the U.S. presidential election, have a history of impacting oil prices. The current election cycle is no exception, with offshore oddsmakers adjusting President Joe Biden’s odds in the wake of fluctuating oil prices. The economic priority for Americans, as highlighted by the Pew Research Center, further underscores the significance of the energy sector’s stability.
Moreover, recent tensions between Israel and Iran have shown the potential for geopolitical events to swing market sentiment. The markets has transitioned from war fears to a state of calm, illustrating the volatility and sensitivity of oil prices to international relations.
Image via Shutterstock
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
