Trump Triumphs in Iowa Caucuses, Associated Stocks Back in the Spotlight

Former U.S. President Donald J. Trump has scored a record-setting win in the Iowa caucuses starting the year of the presidential election. Shares of several Trump-related companies have surged in response to the news.

Major U.S. news organizations, including The Associated Press, Fox News, NBC News, and CNN, took just roughly 30 minutes to project the winner in Iowa's caucuses, with Trump opening up a record-setting 32-point lead over second-place Florida Gov. Ron DeSantis over the following hour or so. The results ended with Trump winning 98 of 99 counties in the Iowa caucuses on Monday, according to preliminary results published by the state Republican Party.

Still, Digital World shares have lost over 93% of their value in the past 12 months as the company's merger with Truth Social parent Trump Media & Technology Group faced multiple delays closing since the deal was announced in October 2021. While it is uncertain if the merger will go through, last month, the company said it expected the deal to close as soon as 2024's first quarter.

"Love him or hate him, drama follows him, and the (Digital World) deal is no different," Matthew Tuttle, CEO at Tuttle Capital Management, told Reuters.

As the election year continues to draw more attention from the public, other traditionally Republican-favored stocks and sectors could also see increased popularity as people hope these companies to benefit from a Trump White House. Some Republicans are reported to hold large parts of their portfolio in financials, oil and commodities, according to an Unusual Whales' report.

Defense is one sector where Trump is expected to boost expenditure, though specifics of his policy are unknown at this point in the campaign, according to Isaac Boltansky, director of policy research at the investment banking firm BTIG. The Department of Defense will spend over $842 billion in 2024.

A boost would be welcome for investors in the military and defense contractors sector, which includes several businesses that are now expanding fairly slowly. According to FactSet, analysts project that General Dynamics will make $46 billion in sales this year, with a yearly growth rate of 3.7% to slightly under $50 billion by 2026.

Increased military spending would have a definite positive impact on these companies, and it may come to pass given Yemeni attacks on Red Sea shipping as well as ongoing tensions between the United States and China.

Boltansky wrote, "Winner: defense sector."

Regional banks may also profit from this, according to Boltansky. While Trump wants to relax bank rules, President Biden wants to impose stricter capital requirements.