To The Moon

As the probability of Vice President Harris winning increases, U.S. stocks showed signs of the "Trump Trade" cooling off and the "Harris Trade" gaining momentum. Investors are selling off stocks expected to benefit from a second Trump term, while stocks aligned with Harris's policy focus are drawing attention.

Trump-sensitive Stocks Fell

For instance, Bitcoin prices fell, and Trump-sensitive stocks like $Trump Media & Technology(DJT)$ and private prison operator $Geo Group Inc(GEO)$ also dropped.

In contrast, solar energy stocks, long sluggish, began to rebound. According to Dow Jones Market Data, solar stocks surged, marking their biggest single-day gain since May. Solar ETFs, like $Invesco Solar ETF(TAN)$ and $iShares Global Clean Energy ETF(ICLN)$, saw noticeable increases, with First Solar Inc. rising over 15%.

Solar Stocks Climb

Market strategists believe that if Harris continues to lead over Trump, solar stocks might keep climbing.

Jay Hatfield of Infrastructure Capital Management noted a clear shift towards the “Harris Trade,” with solar stocks soaring and financial and energy sectors lagging. Baird’s Ross Mayfield called solar stocks a “direct way to assess this bet.”

However, a Democratic president doesn't automatically mean rising clean energy stocks. These stocks had been in a bear market for much of Biden's term but outperformed during Trump’s presidency. Still, given the Democrats' support for clean energy, the solar stock rise on Wednesday isn't surprising. The industry is still economically fragile and heavily reliant on government subsidies.

Wednesday’s market was somewhat erratic: initially swayed by Harris's rising prospects, then hit by August CPI data showing core prices rising faster than expected, which gave investors a reason to sell. $NVIDIA Corp(NVDA)$ CEO Jensen Huang’s comments briefly lifted market spirits.

Yet, these are knee-jerk reactions that won’t alter the Fed’s policy stance.

Additionally, the market might benefit from a historically favorable outcome for U.S. stocks: a divided government. CFRA’s Sam Stovall pointed out that stocks often perform better when both parties share control of Washington. However, he cautioned that the sample size is too small for statistical significance.