If Trump Is Elected, Here’s What You Should Do With Apple, Microsoft and Other Tech Stocks
President Joe Biden and former President Donald Trump have already clinched the presidential nominations of their respective parties, making a rematch in the 2024 election a reality. Regardless of your own political views, as an investor, it’s a good idea to take note of who the next president will be, as it can affect your investments.
Read Next: I’m a Self-Made Millionaire: 5 Stocks You Shouldn’t Sell
Learn More: One Smart Way To Grow Your Retirement Savings in 2024
While the president doesn’t directly control the stock market, everything from tax changes, trade policies and even casual comments made while on the political trail can affect stock prices. And when big tech stocks like Apple and Microsoft comprise nearly 13% of the market cap of the S&P 500 all on their own, how tech stocks react to the president can have a big effect on the overall market.
Here’s a look at how tech stocks have done under President Biden and his predecessor, and what the implications might be for Apple, Microsoft and other tech stocks if Biden doesn’t win a second term.
How Did Tech Stocks Perform Under Trump?
While the Nasdaq-100 index is often used as a proxy for the technology market, that index is also filled with non-tech stocks, such as healthcare and consumer products companies.
To compare the performance of tech stocks under the Trump and Biden presidencies, this analysis used the Technology Select Sector SPDR Fund, which is an exchange-traded fund with the symbol XLK. This $65 billion ETF is a true tech index that only includes stocks in technology hardware, storage, and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components.
On the day Trump was inaugurated, Jan. 20, 2017, the XLK closed at 45.92. When Biden took office four years later, on Jan. 20, 2021, the ETF closed at 128.26. That translates to a gain of 179%.
Discover More: 8 Best Cryptocurrencies To Invest In for 2024
How Does This Compare With Biden?
In a nutshell, tech stocks performed much better during Trump’s presidency than Biden’s. Even though Biden still has 10 months left in his presidency, the performance gap of tech stocks between the two presidents is vast.
Since the XLK closed at 128.26 on the day that Biden took office, it has posted a return of 64.5%, closing at 211.02 on Mar. 13, 2024. This means that the performance of the XLK under Trump was nearly triple what it earned so far under Biden.
How About the S&P 500’s Performance?
The S&P 500 index is often used as a proxy for the stock market as a whole, but it’s also heavily weighted towards technology. As of Feb. 20, 2024, the information technology sector comprised 29.4% of the entire S&P 500, more than the next two sectors — financials and healthcare — combined. Thus, analyzing the performance of the entire S&P 500 over a president’s term incorporates how both tech stocks and the general market are doing.
Biden’s first term is not yet complete — he still has at least 10 months in office — but as of year-end 2023, the S&P 500 was up 25.9%. This makes it highly unlikely that his four-year performance will match Trump’s, as the S&P 500 returned 67% under the former president.
What To Do With Apple, Microsoft and Other Tech Stocks If Trump Is Elected Again
Who resides in the White House should just be one of the considerations you factor into your investment analysis when it comes to stocks like Apple and Microsoft. Other factors, like earnings, interest rates, inflation and geopolitical turmoil can all drive stock prices up or down even more than who the president is. And let’s not forget — both presidents have dealt with the ramifications of a pandemic.
But there’s no denying that presidential policies can play a role as well. For example, according to Lee Munson, president of Portfolio Wealth Advisors, “Biden has not been friendly to China, but Trump’s going to be even worse … When you look at Trump, he’s mercurial and could just cut off the tap … and tell Nvidia they can’t sell anything.”
China is important for American tech stocks both due to its demand and its role in the supply chain, so a president’s policy towards China can move markets. However, again, this is just one factor that will affect big tech under the next president.
While Trump might cause more trouble in China, TD Securities analysts note that corporate and personal taxes will likely remain higher under Biden than Trump. This could affect both demand for products and corporate earnings. Of course, this effect might be more than balanced out by falling inflation and interest rates, which may very well become tailwinds for stocks in the second half of 2024 and into 2025.
The best course of action is to continue to do your own research and due diligence and look to the long term. Apple and Microsoft will likely far outlast the next four years. If you believe in these specific stocks, tech stocks in general or the market at large, continuing to add to your positions — especially if they temporarily fall — is likely the best course of action.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: If Trump Is Elected, Here’s What You Should Do With Apple, Microsoft and Other Tech Stocks
