Why Corrections Corp. of America, SLM Corp., and U.S. Steel Jumped Today
Wednesday's stock market action reflected the shock that many felt in response to the results of Tuesday's presidential election. After seeing Dow futures fall as much as 800 points overnight, major market benchmarks closed Wednesday with gains of between 1% and 1.5%. Several stocks had much more substantial increases, and Corrections Corp. of America (NYSE: CXW), SLM Corp. (NASDAQ: SLM), and U.S. Steel (NYSE: X) were among the best performers on the day. Below, we'll look more closely at these stocks to tell you why they did so well.
Image source: Corrections Corp. of America.
Corrections Corp. sees a possible turnaround from a Trump administration
Corrections Corp. of America soared 40% on a strong day for private prison companies industrywide. The company suffered substantial declines during the summer, when the U.S. Department of Justice said that it would end the use of private prisons. Investors feared that other federal and state agencies might follow the Justice Department's lead, but now, many believe that the Trump administration might choose to reverse course on President Obama's policy and encourage continued use of for-profit prison companies. Even with the gains, however, Corrections Corp. is still trading down by more than a third from its price at mid-year.
Sallie Mae hopes to sustain the status quo
SLM Corp. jumped 18% as investors celebrated another potential area in which a change of leadership at the federal level could spur a friendlier environment. The Democratic platform had included several provisions that would encourage free educational opportunities for many Americans, and investors in the lender and servicer on many student loans feared that such provisions would reduce demand and eat into its loan business. With the Democrats having been soundly defeated, SLM Corp. investors are more confident that current opportunities will remain, offering continued profits for the lender and servicer going forward.
U.S. Steel looks for trade, infrastructure help
Finally, U.S. Steel climbed 17%. The steelmaker stands to benefit from a couple of potential Trump administration initiatives. First, the president-elect has indicated his willingness to be tough on trade, and given the victories that the U.S. has already won in fighting against overseas steel producers, U.S. Steel stands to benefit if the Trump administration can extract concessions with trade partners. At the same time, a call to boost infrastructure spending would also potentially boost U.S. Steel's business domestically. U.S. Steel was just one of many steel stocks that soared today, but given how much it has suffered during the poor period for the steel industry, U.S. Steel had plenty to gain from good news.
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