Trump’s “Big Beautiful Bill” Triggers Market Shakeout: Key Assets Under Pressure

The passage of President Donald Trump’s sweeping tax-and-spending legislation—dubbed the “One Big Beautiful Bill”—has jolted financial markets, exposing vulnerabilities in sectors reliant on federal support and low borrowing costs. While the bill promises permanent tax cuts and increased defense spending, its rollback of clean energy incentives and expansion of the federal deficit have led to significant market adjustments.

Solar energy stocks have been among the hardest hit. The bill’s elimination of tax credits established under the Inflation Reduction Act has undermined financial incentives crucial to the sector. Enphase Energy (ENPH) shares plummeted 16%, marking it as the worst performer in the S&P 500 index. Sunrun (RUN) experienced a staggering 39% decline, while NextEra Energy (NEE) and First Solar (FSLR) fell by 7.8% and 4.7%, respectively. Analysts attribute these declines to the bill’s stringent rules, which could disqualify many projects, especially those involving Chinese suppliers who dominate the solar product market.

The bond market has also reacted negatively. The bill is projected to add approximately $3.8 trillion to the national debt over the next decade, exacerbating concerns about fiscal responsibility. This has led to a sell-off in global bond markets, with yields on long-term U.S. Treasury bonds reaching their highest levels in over a year. The 30-year yield climbed above 5.1%, reflecting investor apprehension about increased Treasury issuance and weak demand.

Electric vehicle (EV) manufacturers are facing headwinds due to the bill’s removal of the $7,500 EV tax credit and the introduction of a $250 annual fee. These measures are expected to dampen consumer demand for EVs, impacting companies like Tesla (TSLA) and Rivian (RIVN). The broader implications for the EV market include potential slowdowns in adoption rates and increased competition from traditional automakers.

Healthcare stocks are under pressure as well. The bill proposes nearly $800 billion in cuts to Medicaid, raising concerns about reduced access to healthcare services for low-income individuals. This has led to declines in shares of companies heavily involved in Medicaid services, such as Centene Corporation (CNC) and Molina Healthcare (MOH). Investors are wary of the potential decrease in revenue streams for these companies.

Utilities and real estate investment trusts (REITs) are experiencing volatility due to rising bond yields. As yields increase, these traditionally stable sectors become less attractive to income-focused investors. The higher yields also raise borrowing costs, potentially impacting the profitability of companies within these sectors. Investors are re-evaluating their positions in utilities and REITs in light of the changing interest rate environment.

Tips for Traders

• Monitor Solar and Clean Energy Stocks: Given the elimination of key tax credits, companies like Enphase Energy (ENPH) and Sunrun (RUN) may continue to face downward pressure.

• Watch Treasury Yields: The projected increase in national debt could lead to further rises in long-term Treasury yields, affecting interest rate-sensitive sectors.

• Assess EV Market Exposure: The removal of EV tax credits may impact demand; companies like Tesla (TSLA) and Rivian (RIVN) could experience volatility.

• Evaluate Healthcare Stocks: With significant Medicaid cuts proposed, companies like Centene Corporation (CNC) and Molina Healthcare (MOH) may see revenue impacts.

• Reconsider Utilities and REITs: Rising yields make these sectors less attractive; investors should assess the risk-reward profile in the current interest rate environment.