3 sectors to watch ahead of the 2024 presidential election

Recent market volatility has left many thinking about the potential impact of the 2024 US presidential election on stocks. EquitySet CEO Tony Zipparro joins Yahoo Finance to discuss three sectors to watch ahead of the election, including energy, technology, and consumer discretionary.

"If we're looking directly on themes and kind of motifs we can pull out of elections," Zipparro says, "you look for the overlap, the Venn diagram of what is to avoid or consider in either candidates' case. And so when you look at policies… you look at domestic… and you look at innovation… you take those and you can kind of sprinkle it through any sector you want to look for good finds… or finds that may be positioned poorly based on what the policy comes to be." He thinks it makes more sense to pick individual stocks instead of a basket of stocks.

In energy, Zipparro's top picks are Chevron (CVX), NextEra Energy (NEE), Dominion Energy (D), and Tesla (TSLA), while some names to avoid are Peabody Energy (BTU) and Chesapeake Energy (CHK).

In tech, some names Zipparro says to consider are Nvidia (NVDA) and Advanced Micro Devices (AMD). "It's really... looking at domestic. Most semis have a large exposure to international supply chain production, manufacturing, something. And so that's where I think you look at innovation because the domestic picture isn't as clear," Zipparro notes.

In consumer discretionary, Home Depot (HD), Lowe's (LOW), Columbia Sportswear (COLM), and Yeti (YETI) are among Zipparro's top picks. "I think it's buying into those that are domestic... or manufacture and produce more in the US," Zipparro says.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Mariela Rosales.

Video Transcript

Markets nearing the end of its most volatile week of 2024.

Investors keeping an eye on what could cause stocks to tumble again at a moment's notice.

And one of those catalysts appears to be the US presidential election for more on how to play the markets ahead of a busy November.

We've got Tony's Who is the equity set?

CEO joining us here in studio.

Good to see you once again Here, Tony.

Great to see you.

And so you know, we're a couple of months off, but political talk campaigning, ramping up fast and furious.

You've got one former president saying that he should have an eye into what the Fed is doing.

And all of this is going to lead into November, which has already been looked at by many CEO.

S is what's going to be a very vitriolic earnings or excuse me election season.

What are the best way that investors can stay a step ahead of the campaign talk rhetoric and debates Even?

Definitely.

I think there's a couple variables, uh, in terms of definitely recession market softening, right, that that's a big one.

And I think that could, uh, overshadow the election.

But if we're looking directly on themes and kind of motifs, we can pull out of elections.

I think you look for the overlap the Venn diagram of what is to avoid or consider in either candidate's case.

And so when you look at policies, I think a big thing you look at domestic right and whether it's production, manufacturing, selling and you look at innovation.

And I think you take those and you can kind of Sprinkle it through any sector you want to look for good finds, right or finds that may be positioned poorly, right, based on what the policy comes to be.

And does this mean picking individual winners and losers?

Are you looking at cross sector and saying it's better to hold the basket?

I think it's picking individual winners and losers, right?

Diversifying a bit, picking a couple right and not just putting all your eggs in one basket there.

Uh, but then it's also going across sector with those individual right picks that you do.

Um, while certain sectors right might be a little bit more exposed, right, consumer discretionary.

Some of those names, uh, little bit of a mixed bag risk reward, right?

It is up there in number versus when you look at consumer staples, right?

You can pick maybe a little bit, uh, less volatile names.

So let's go into some of those sectors that we had just mentioned for our our viewers there.

And let's start with energy there.

Who are some of the winners losers that you're keeping tabs on?

So, of course, traditional oil, right?

If if if you look at Harris and and renewability and crackdown right, it doesn't necessarily look good for traditional oil.

Uh, versus right, Trump obviously renewable camp, traditional oil.

And so that's where I think you go in and you play those two themes I mentioned in the beginning, right?

Domestic and innovation.

And so you can still go into, I believe big traditional oil companies like Chevron, right, Nextera Dominion as long as they're being innovative and have already started the process of renewable energy initiatives, Um, I think you can go there, right?

And I think then, of course, EVs you can dabble a bit, right?

And it's all about valuation.

Tesla, but at the right number.

Um And so because of all the moves we had, you know, going up near 300 now, you know, sub 200 right?

And a lot of these names up 10 20% in the course of a week.

That's where I think you overlay it.

Um And then you avoid the ones that really haven't made a footprint or again just aren't really domestically founded.

And then on the other that we were discussing a moment ago technology in that sector.

I mean, massive pullback over the course of this week that we saw and some picking and choosing that investors are trying to chart as they decide where it seems like an opportunity to get back in at discount prices if you will not bargain basement, but certainly offer some of the high valuations that we've seen before.

Yeah, and if you would have asked me three weeks ago, I would have said, Probably don't touch semis at all.

But even right, the mo the moves that we've seen it's OK, You can I call it nibbling, right?

You can get a little bit right, because they're not so crazy for PE S even, uh, active PE S that that we're looking at.

And so I think technology the big thing is semi is how does the election impact it?

It's really again looking at domestic most semis have a large exposure to international supply chain production, manufacturing something.

And so that's where I think you look at innovation because, you know, the domestic picture isn't as clear.

You're not gonna get as Oh, hey, this there's this.

These five companies I can choose from that are only in the US.

That's where I think the NVIDIA's right.

The AM DS might edge out things like the Intels and the mic runs.

Um, just because they're gonna move faster than the others and let that disrupt them less.

I'm looking at some of the earnings reports that we have coming out next week as well, and you've got a lot of consumer discretionary names when you think about how we should be evaluating that sector, not even just for the next earnings or this current earnings period that they're gonna be reporting for but looking out into the back half of the year as well.

And when you get into the consumer discretionary, that's where I think it's It's more of a roll of a dice, right, because I do believe we're softening, right?

Not the sky isn't falling, but I think a lot of those names will be taken down.

And so I think it's buying into those that are domestic right are about home improvement.

They might be the home depots, the lows or manufacture and produce more in the US Colombia.

Right?

Sportswear.

Um, Deckers, Yeti, Uh, and stain Interesting, Um, and so staying away from maybe some of the ones that have larger international risks.

Right And again, you're looking at almost every Ame apparel manufacturer.

Um, so despite innovation, right and and things we've talked about in the past of like, Lulu Lemon under Armour, Nike, you know, Gap, Ralph Lauren I. I think you stay away from those, but maybe because the unknown is is too great in in that market, what do we expect?

The And?

And there's always this interesting thought process that investors have to wade through every four years when we get into a general election of beyond the themes that we could hear discuss what the real economy will look and feel like as carried through and correlated to the stock market activity.

I mean, what is the typical response that we see after election or post election, and then what's really takes the cap from there in terms of investors eyes, because it's really been a market driven by two themes.

It's been the Fed, and it's also been generative a I and it seems like one is fading a little bit and the Fed is finally getting towards their rate cut.

And I honestly feel that the election it will create short term pops and and falls.

But what I'm concerned about, or what I'm focused on is the economy is floating, and I think it's floating and and what hasn't been paid enough attention to is debt, debt levels, health of the consumer and I. I think it's very healthy for some and not healthy for a lot.

And that's where I think that will take focus.

Um, and I think there'll be some cracks and then some breaks in the system over the next year or two, which that's why I'm not focused so heavily on what do I invest in from an election, right?

In a policy standpoint, because I'm more worried about the financial stability of credit markets and loans and refinancing, even if they cut 75 basis points in September.

Right or something?

You know, crazy like that.

Um and so I'm worried about that state of the economy more than more than the election itself.

Anthony, Tony, I should say great to see you.

Tony is a park.

Who's the equity set?

CEO joining us here on set.