8 ways President Donald Trump will affect Wall Street

Wall Street reacts to President-elect Trump.

Well, that was quick. Wall Street's midnight anxiety about Donald Trump's victory appears to have been for nothing. The market snapped back quickly Wednesday morning, just hours after all the major indices tumbled badly overnight. But now the campaign is over, and the more difficult job of governing is set to begin. Here are some of the major issues from President Donald Trump that Wall Street will be watching in the weeks and months to come.

How will Trump and Congress get along?

Republicans have control of the White House, the Senate and the House, but that doesn't mean Trump will have an easy time on Capitol Hill. The GOP was badly fractured throughout the primary and general election season, as Trump insulted his way through 17 Republican opponents. Several big names in the party, including former Florida Gov. Jeb Bush, Ohio Gov. John Kasich, Arizona Sen. John McCain and 2012 nominee Mitt Romney refused to support Trump, and House Speaker Paul Ryan would not campaign with him. Trump will have to build support with his former opponents to push his populist agenda into law.

See how newspapers around the globe reacted to Trump's victory:

Health care will be a growth sector.

The health care sector is perhaps the single biggest beneficiary of a Trump presidency, though not necessarily because of anything Trump himself will do for it. It's more the fact that Hillary Clinton won't be calling the shots that has investors feeling bullish. Clinton had called out the health care sector specifically for its price-gouging on life-saving drugs, and outlined plans she would take to prevent price-gouging. The Health Care SPDR ETF (ticker: XLV), which tracks health care stocks in the Standard & Poor's 500 index, rose about 3 percent on Wednesday after Trump's victory. Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN) were two standout performers in the sector.

The financial sector flexes its muscle.

Given the perception of Clinton as a friend of Wall Street, one might expect bank stocks to plunge after Trump's victory. However, financials and health care were the two top-performing sectors in the immediate wake of Trump's surprise win. The fact that Trump himself is a billionaire New York businessman who's worked closely with large banks his entire career in the private sector may have something to do with that. In fact, it's likely Trump will take a more hands-off approach to Wall Street regulation, as he's spoken before about repealing Dodd-Frank, the most significant piece of financial legislation this century.

Oil and mining companies are hot – for now.

Trump campaigned on a promise to support American jobs, particularly in the domestic oil and coal industry. So while major foreign oil providers such as BP (BP) and Royal Dutch Shell (RDS.A) were essentially flat on Wednesday, smaller companies such as Valero Energy Corp. (VLO), Kinder Morgan (KMI), Williams Companies (WMB) and Newmont Mining Corp. (NEM) were all beating the market. Look for domestic energy companies to do well in the Trump administration – if he is able to uphold his campaign promises.

Interest rates may hold fast, again.

The Federal Reserve, once widely believed to be gearing up for an interest rate hike at its December meeting, will likely rethink that decision after Trump's surprise victory. Although the U.S. stock market erased all of the early losses it racked up when it first became apparent Trump was going to win, a Trump presidency still brings huge uncertainty along with it. The Fed will want to have some idea of how the Trump administration will handle things like international trade, geopolitical issues, the U.S. energy industry and the national debt before blindly raising rates because it feels overdue.

Gold is a better option now.

Gold faces modestly better prospects under a President Trump than a President Clinton, at least in the short term. The precious metal is often seen as a hedge against uncertainty, and there's plenty of that to go around with a first-time politician coming to the White House. Another tailwind for gold is the Federal Reserve's increased likelihood of keeping rates lower for longer – rising rates tend to pressure the price of gold, as gold reserves don't pay any sort of dividend. The SPDR Gold Trust (GLD) and VanEck Vectors Gold Miners ETF (GDX) each advanced after Trump's win, with GDX soaring 5 percent.

Gun stocks are vulnerable.

Wall Street is rebounding, but you wouldn't know that looking at the major gun stocks. Sturm Ruger & Co. (RGR) was down 12.6 percent Wednesday, while Smith & Wesson Holding Corp. (SWHC) was down 11.4 percent. The reason? Trump had long vilified Clinton as wanting to dismantle the Second Amendment, and nothing boosts gun stocks more than a perceived threat to the industry. But with Trump moving into the White House, there's no fear that handguns will become collectors' items, so the stock won't be as appealing.

Weakness in foreign markets.

Making America Great Again doesn't necessarily translate to international markets – and America's willingness to embrace Trump's repudiation of President Barack Obama's free trade policies continues to send ripples through international markets. Indices in Brazil, Argentina, Australia, China, Hong Kong, India, Japan and Taiwan were all down Wednesday. If Wall Street continues to shrug off naysayers who predicted that Trump's presidency would trigger a recession, foreign markets will begin to bounce back. But global neighbors have every reason to be concerned by Trump's rhetoric, and overseas markets will be a touchy place to invest in the near term.

See more pics from Trump's win on Tuesday:

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