Tech is Taking a Hit Because of Trump

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american flag and stock chart

It’s been just one surprise after another since Tuesday night.

It was predicted that Trump winning the election would mean chaos in the market, but most people were sure that wasn’t going to happen because he had become such a long shot. So when he did actually end up winning, shock contributed an extra push and, sure enough, the market came tumbling down.

But that turned out not to be the biggest surprise.

Who would have thought that the market would rally in less than 24 hours? Stocks soared even as rioting took to the actual streets. The dollar stayed high. Of course, no one knows what will happen once Trump takes office, but that is the case regardless of any new administration. For the moment, almost everything looks like it will be all right.

Except the tech sector. Looks like you’re going to be in for a little bit of a bumpy ride.

The Dow skyrocketed over 200 points by closing today, hitting a record high. The Standard and Poor’s 500 Index hit its own record high. But tech stocks dipped and NASDAQ tumbled.

Why?

Some have speculated that it’s because Trump has been threatening tech companies with penalties for outsourcing so much of their operations overseas. And it’s possible that may have had some effect.

However, it seems more likely that investors expect the companies who will benefit from Trumps plans for increased infrastructure to provide the biggest gains in the near future and wanted to devote more space in their portfolios for these stocks. In which case, something had to be sold off, and tech stocks were a good candidate because so many of them had huge gains this year.

The problem is that, with either scenario, the damage seems to be long-term. Of course, the long-term buy and hold investors treasure times like this, because they consider it a buying opportunity when well-run companies are available at cheaper prices. As always, individual investors have to make their own choices about where they stand.

 

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