The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles to a large degree - have moved overseas, where labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines and AI) and services (such as Zoom calls) and moving into new markets, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

The U.S. presidential election is just days away. Which candidate is better for the stock market? Surprisingly, we don't think it matters that much. This theory is backed up by historical data. Our review of presidential cycles reveals that the primary driver of stock success is market fundamentals - how well the economy is doing, if inflation is maintained at the low 2%-3% levels, if the labor market remains strong and unemployment doesn't creep up, and if interest rates are lower. This is the best case for stocks and outweighs whoever is in the White House. That said, there are some nuances and implications for individual sectors. For our list this week and next, we look at several sectors and how they might be impacted by America's choice for the next president. Below, we look at the Industrial and Financial sectors and how they might perform under either candidate.

Old Dominion Freight Line is the second-largest less-than-truckload carrier in the United States, with more than 250 service centers and 11,000-plus tractors. It is one of the most disciplined and efficient providers in the trucking industry, and its profitability and capital returns are head and shoulders above its peers. Strategic initiatives revolve around boosting network density through market share gains and maintaining industry-leading service (including ultralow cargo claims) via steadfast infrastructure investment.

The transportation and supply-chain industry is rarely noticed -- until something goes wrong. The sector moves goods, and there is a direct relationship between consumer demand and the amount of freight transported. In the early days of COVID-19, consumer demand plummeted. But as the world shifted to remote working, demand surged. After the pandemic began to recede, many workers stayed home from the office, but shifted spending towards experiences, leading to a downturn in shipping demand. While the supply chain has begun to normalize, it remains out of balance, with periods of rising shipping likely to make sourcing goods and inventories at a timely rate challenging. According to the Department of Transportation's Bureau of Transportation Statistics, the U.S. transportation system moved an average daily 55.2 million tons of freight valued at more than $54 billion. Excluding materials moved by pipeline, estimated annual freight moved will be approximately 16.4 billion tons. The majority of this is moved by truck, which handles about 75% of the load. Water and rail each move approximately 6%, while air moves less than 1%. The industry accounts for almost 2% of the S&P 1500 market capitalization and just over 2% of the revenue generated by companies in the index. The largest 20 companies by market capitalization collectively generated revenues of almost $410 billion in 2023. We expect challenging market conditions -- including rising labor costs and lower volume -- to persist for the next few quarters. But as the economy recovers from high inflation and deglobalization, we see U.S. companies looking to strengthen domestic supply chains.