The US stock market encountered a broad sell-off after election results showed that not much had changed.
The Democrats sill hold the White House and the Senate and Republicans retained the House; traders were expressing their concern that the parties might not be able to resolve the fiscal cliff.
President Obama’s reelection also saw several clear winners and losers emerge in the ETF market.
Coal ETFs took a beating today, with traders concerned that the Obama administration, through the Environmental Protection Agency, would impose regulations that would further limit coal mining in the US.
The Market Vectors Coal ETF
(NYSEARCA:KOL), which had gained close to 9% in the 30 days up till Nov 6 on optimism for the victory of Mitt Romney, fell more than 5% in midday trading today. The PowerShares Global Coal ETF
(NYSEARCA:PKOL) was also down over 5%.
“(The drop is) 100 percent related to election results," Eric Green, senior managing partner at Penn Capital Management, which owns coal stocks, told Reuters
Defense ETFs also rose ahead of yesterday’s elections in anticipation that Romney, who pledged to increase defense spending, would win. After Obama won, however, the iShares Dow Jones US Aerospace & Defense ETF
(NYSEARCA:ITA) dropped 2.56% while the PowerShares Aerospace & Defense ETF
(NYSEARCA:PPA) dipped 2.80%.
Among the ETFs that will benefit from the Obama victory, look no further than gold ETFs, such as the SPDR Gold Trust Shares
(NYSEARCA:GLD), which had been down 5% in the month prior before staging a rally on election day, the iShares Gold Trust
(NYSEARCA:IAU) or the Market Vectors Gold Miners ETF
(NYSEARCA:GDX). Obama will likely retain the services of Ben Bernanke as the Fed chair, which improves the likelihood of future central bank stimulus.
“Bernanke will continue to have full reign with the potential of another term in which he can execute his QE to perpetuity,” said Jeff Sica, president of SICA Wealth Management, in an IBD report
. “This will continue to weaken the dollar and increase the price of gold. The Obama Administration is firm in their opinion that the economy is improving, so I see little chance of them changing course in the next four years.”
Though they, too, have been hit by today’s sell-off, many experts believe that clean energy companies will benefit from Obama getting a four-year extension on his White House residency. As such, consider ETFs like the Market Vectors Solar Energy ETF
(NYSEARCA:KWT), the Guggenheim Solar ETF
(NYSEARCA:TAN), which both have investments in the largest US-based solar company, First Solar
(NASDAQ:FSLR), or the iShares S&P Global Clean Energy Index Fund
Finally, Minyanville’s own Anthony Shields argues that President Obama’s policies will provide a shot in the arm
for tech companies because the president supports the expansion of internet infrastructure and the improvement of science education, among other things. If you agree with Shields, you might want to bet on the Technology Select Sector SPDR
(NYSEARCA:XLK) or the iShares Dow Jones US Technology Index
Fund (NYSEARCA:IYW), which has Apple
(NASDAQ:AAPL) as its top holding.
No positions in stocks mentioned.
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