Specific sectors of the market could be notable winners once President-elect Donald Trump returns to the White House on Monday, according to Alpine Macro. These pockets include small-cap stocks, industrial stocks, fossil fuel stocks and aerospace and defense stocks, Dan Alamariu, the firm’s chief geopolitical strategist, wrote in a Thursday note. Specifically, he suggested investors go long on oil stocks and small-cap industrial companies, and go short on crude oil prices, alternative energy and specialty retailers. Alpine Macro’s picks come as stocks linked to the so-called Trump trade have roared back to life this week, including the Russell 2000 and defense and energy stocks. More broadly, stocks posted their best week since early November and turned green for the year after a weak start to January. .RUT 3M Mountain Russell 2000, 3 months Stocks linked to Trump’s return to the White House rallied in the wake of his election in November, as the president-elect has long espoused deregulation and pro-domestic manufacturing policies that investors viewed as beneficial for small businesses. caps and banking operations. His talk that allies need to increase defense spending to better align with the U.S. contribution to NATO has also helped increase defense stockpiles. But trade seemed to falter at the start of the year, only to come roaring back. The Russell 2000 advanced 4% this week, alongside the S&P Aerospace & Defense Select Industry Index ETF (XAR). “Alpine Macro’s view is that US stocks should continue to perform well in 2025, as the Trump administration will be pro-growth and prioritize rather moderate, market-friendly policies,” Alamariu said. XAR 3M mountain S&P Aerospace & Defense Select Industry Index ETF (XAR), 3 months That said, he warned that the first 100 days of the new administration could be marked by volatility. Additionally, he added, the market remains vulnerable to a potential correction due to geopolitical and domestic risks, as well as headwinds from Trump’s tariff plans. Although Trump remains a proponent of U.S. energy dominance and independence, Alamariu expects this stance to help oil stocks more than oil prices. Oil companies, particularly U.S. shale producers, will likely benefit from a greater share of the global oil market. “Trump’s first day EOs will emphasize ‘drill, baby drill,'” he wrote. “Policies will include withdrawing from the Paris Climate Accords, opening federal lands to fossil fuel production, lifting Biden restrictions on LNG exports, repealing power plant emissions rules of the EPA and the rescinding of the SEC’s climate disclosure requirements.” And because Trump has pushed his allies to increase military spending and buy American-made equipment, Alamariu said, aerospace and defense stocks are well positioned, particularly those that provide equipment for air power or defense names that have underperformed their peers. To be sure, Alamariu said Trump’s call for tariffs on global imports remains a potential hurdle for markets until more clarity is given. “If there is one policy that is most likely to disrupt markets and the economy, it is Trump’s approach to tariffs,” Alamariu said. “The economic and political consensus on tariffs is slowly shifting in favor, but the Trump administration may not yet have decided how to proceed.”
Sectors that could gain in the early days
