Prison stocks soar, gun stocks lower following Trump win
It’s impossible to say what a Donald Trump presidency will entail, but if the stock market is any indication, investing in private prisons will be great again. Pharmaceuticals and defense stocks also both saw an increase.
Investors are adapting their choices after Trump was declared the winner of the US presidential election. Corrections Corp.’s stock surged 60 percent before paring to 34 percent Wednesday morning, Bloomberg reported. GEO Group, another private detention facility firm, saw their stocks rise by 18 percent.
The Departments of Justice (DOJ) and Homeland Security (DHS) had both announced plans to move away from the private prison system. The DOJ cited safety concerns in an August press release that explained their plans to transition away from private prisons, while DHS announced they would review use of correctional facilities for detained undocumented immigrants.
However, analysts believe Trump’s presidency could halt efforts to phase the use of private contractors for federal corrections facilities.
"Private prisons would likely be a clear winner under Trump, as his administration will likely rescind the DOJ's contract phase-out and ICE capacity to house detainees will come under further stress" analysts at Height Securities LLC told Bloomberg.
Big pharma also saw a boost from Trump’s election. Stocks for insulin manufacturer Novo Nordisk rose 6 percent, according to Fortune. Eli Lily, another insulin maker, came under fire recently for drastically increasing the prices of their life saving drugs and also saw a stock price increase of 3.1 percent.
EpiPen manufacturer Mylan also had a good Tuesday night. After months of negative press for the price hike on their medication, along with investigations for possibly defrauding Medicaid, Mylan’s stock prices had been low prior to Trump’s election. On Wednesday, they opened with an 8 percent increase in Tel Aviv.
Defense and arms suppliers are also having a good day following the presidential election. UK arms supplier BAE Systems and defense-electronics firm Thales increased by 3 percent, the Wall Street Journal reported. Trump’s plans for increased military spending could play into the increase, along with Trump’s skepticism towards the North Atlantic Treaty Organization (NATO).
In a surprising turn of events, gun stocks suffered from the Republican election. Smith & Wesson shares fell 16 percent, while Sturm Ruger saw their latest drop since February 2014, according to Business Insider. The plunge in weapons stocks could be related to Trump’s support for the Second Amendment.
During the election, Sturm Ruger saw the demand for guns increase while Clinton was campaigning on expanding gun control laws. However, Trump’s opposition to increasing gun control could signal the end of increased demands for guns if there is a decrease in concerns over having them taken away.