White House policy has been headwind for some stocks to start 2026
With trade uncertainty in the rear view mirror , and a newfound focus on easing the cost-of-living heading into the midterm elections, White House policy is expected to boost equities in 2026 . Yet some corners of the market are still expected to lose out from executive policy. Already, one month into the year, several of President Donald Trump’s policies have led to headaches for parts of the market, even as the broader narrative remains intact. “This remains one of the best environments we’ve seen in a long time for business,” said TD Cowen policy analyst Jaret Seiberg, “unless you’re one of the handful of companies in the White House spotlight.” Take financial services. In January, Trump announced he would push for a one-year 10% cap on credit card interest rates , sending financial stocks lower . Or health insurance. The administration’s Center for Medicare and Medicaid Services delivered a preliminary notice that rates paid by the government for Medicare Advantage plans would change little in 2027 at the end of last month. Stocks of insurers plummeted on the news . .SPX .GSPF,.GSPHC YTD line .SPX vs. .GPSF & .GPSHC year-to-date chart. Based on the stock reaction, both those moves were surprises and neither were priced into the market, according to Raymond James policy analyst Ed Mills. Credit card caps While large-cap banks with credit card portfolios have begun to recover in February, pure-play credit card stocks remain below their levels before the interest rate cap-induced sell-off. Visa and Mastercard are both off more than 6% in the month through Tuesday, despite the inability of the White House to unilaterally implement the rate cap proposal. But the presidential rhetoric has nonetheless limited the ability of the stocks to recover. “There’s still that headline risk, and I think that’s going to weigh on the group for a bit,” said Truist analyst Matt Coad, who covers the credit card processors. One lingering headwind for the stocks is a gnawing worry about Trump’s willingness to test how far he can go using only executive authority, according to Mills. Investors question how the president might creatively enact policy without congressional approval. “There is some amount of lingering, free-floating fear that even if they don’t have an explicit statutory authority to deliver on some of this stuff, you don’t want to be on their bad side,” said Tobin Marcus, head of U.S. politics and policy at Wolfe Research, pointing to the administration’s ability early in its tenure to skirt a law passed by Congress to ban TikTok . Health insurers When it comes to health insurance, however, the executive branch is perfectly capable of acting alone and deciding on Medicare Advantage payment rates without industry or legislative consultation. The Trump administration sees limiting rate increases as a way to crack down on upcoding, where insurers allegedly exaggerate how sick patients are in order to extract higher payments from the government. Limiting the annual payment hikes, proponents argue, will cut down on fraud and save taxpayers money. Insurers contend their reports are accurate. While the initial announcement will be codified with a revised figure typically delivered in April, which normally sees a few-hundred basis point increase in the final rate, Cantor Fitzgerald health care analyst Sarah James doesn’t think it will change more than expected. “Going after fraud and abuse … it’s a real priority for this administration. It’s something that they talked about as a way to find savings,” she said. Recognizing the action that the White House can take alone, health insurers haven’t come out swinging against the policy, in contrast to the united reaction of banks and credit card companies after Trump’s rate cap proposal. “I don’t know if their expectation is to get a higher increase than normal, but I do think they’re intentionally not blaming the administration so that they can have better negotiations,” James said. Maybe as a result, there’s upside for a handful of stocks in the group, even if the policy goes through unchanged, the Cantor analyst said. James noted that in the sell-off after the White House announcement on payment rates, stocks such as Cigna that have no Medicare Advantage exposure were also hit, indicating room for future recovery no matter the exact shape of policy. Next moves Now, investors are wondering what Trump’s next, potentially hostile, move might be. “What I’ve gotten asked most frequently is, ‘What is he going to do next?,” Mills said of the president. “And obviously, there’s no answer to that question, and because there’s no answer, people get nervous.” Several policy analysts agreed that the greatest risk for the rest of the year is in companies that could suffer from Trump’s focus on consumer affordability ahead of the midterms. That was the interpretation of the credit card rate cap. “That proposal is emblematic of a trend that we’re going to see throughout the year, which is a roving, sector-by-sector attempt to come up with ways to address affordability,” Marcus said. Mills named three sectors that are vulnerable: housing, health care and energy. One possible bright spot for shareholders in those industries, however: “If it was easy to do, [the White House] would have already done it,” he said. On energy, Marcus believes the administration might make consumer-friendly noises on electricity prices. While gasoline is down , electricity costs rose nearly 7% in December compared with the year-earlier period, according to the consumer price index reading , owing to surging demand from the construction of data centers and tight supplies caused in part by aging infrastructure . But Marcus noted that utility regulation is under state and local authorities, meaning White House action is limited to rhetorical headline risk rather than a fundamental shift in policy. Seiberg sees the high cost of housing as the next focus for the administration, which benefits from the ability to take executive actions at the Federal Housing Finance Agency. Consequently, title insurers, mortgage insurers and credit rating agencies are at risk from potentially harmful policy, the TD Cowen analyst said. For example, any push to lower closing costs and to require only one credit report to apply for a mortgage is a risk to those companies, he said, along with efforts to try to lower mortgage insurance premiums to push down monthly payments. To be sure, any challenge presented to the status quo by changing Trump administration policy may prove fleeting if little comes to pass months after such pronouncements. That would also reinforce investor faith that any dips are meant to be bought in the second Trump term, especially if stern prescriptions are followed by diluted or non-existent new rules. But investors maybe shouldn’t count on easy solutions. Hazards remain and Seiberg, for one, believes recent political shifts and heightened polarization only exacerbate policy uncertainty, especially at a time of high costs. “The country has turned more populist every year since the financial crisis” in 2008, he said. “And that is translating into policy risk across the board.”
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