Trump’s 2024 Victory Impacts Fossil Fuel Investments

Former President Donald J. Trump has claimed victory in the closely watched 2024 election, seizing crucial battleground states, notably Pennsylvania, which carries 19 electoral votes. Despite major networks not making a final call, his win in these critical states hints that he may soon return to the White House.

Trump’s strong backing of the fossil fuel sector could bolster companies like Exxon Mobil Corp XOM. While entrepreneur Mark Cuban has criticized Trump for favoring “oil company cronies” over the American public, experts suggest that Trump’s potential second term would favor the oil industry and perhaps mitigate high inflation.

It’s important to note that increased domestic oil production might also impact prices significantly. A recent rise in oil prices, for instance, was linked to OPEC+’s decision to hold off on a planned production increase. Alternatively, a Kamala Harris administration could have resulted in diminished support for the domestic oil sector in favor of renewable energy initiatives.

In September, the landscape changed after a presidential debate where Trump’s performance faced harsh criticism. This led to a temporary surge in momentum for Harris, but recent trends indicate that support for Trump has grown stronger heading into the election.

Exploring Direxion ETFs: As fossil fuels regain popularity, investors may look to two Direxion exchange-traded funds to capitalize on potential market shifts. The first is Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares GUSH, designed to deliver twice the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

In contrast, the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares DRIP allows investors who are more cautious about the future of fossil fuels to protect their portfolios. This fund operates inversely to GUSH, so it increases in value when the underlying index declines.

Both ETFs are known for their volatility, which means that investors should avoid holding positions for more than a single day. If held longer, the effects of daily compounding can lead to significant investment losses.

Performance of the GUSH ETF: Following the Democratic momentum ahead of the election, the GUSH ETF has dropped over 14% since the start of this year.

• Trump’s potential victory could result in a shift in sentiment towards this leveraged oil ETF.
• Since September, GUSH has shown a pattern of rising lows, hinting at market expectations regarding the election outcome.

Performance of the DRIP ETF: Although DRIP fell behind its initial value this year, it gained nearly 24% over the past six months as Harris’s polling standings weakened against Trump.

• With Harris’s chances of winning dwindling, the oil index is likely to rise, presenting challenges for DRIP.
• DRIP’s inability to break through a resistance level at $12 is indicative of broader market trends.

Featured photo by John R Perry on Pixabay.