CNBC's Jim Cramer said President-elect Donald Trump's proposed policies are "extraordinary" rocket fuel to the surging stock market.
Financial, construction and energy stocks have rallied in response to the Republican's victory. As a result, Cramer is now bullish on drug and health stocks.
"This expansion in the banks not just because of regulation, but it's also because of interest rates going higher, but it's also because people feel loan growth is going to be better, people feel lower taxes [are coming]," Cramer said on CNBC. "When that group [of financial stocks] leads, that's a freight train," he said.
"What I'm seeing ... is a pile-on on what [were] considered to be, I think, the worst stocks in the world if Hillary Clinton were elected president," Cramer said.
Meanwhile, "the biggest impact of this shocking election is probably on the healthcare group,” he said on CNBC.
The prospect of Clinton winning the White House had weighed on drug stocks, especially after she tweeted about cracking down on pharmaceutical price gouging in September 2015.
But Cramer explains that Republicans seek limited regulation and free markets. Cramer doesn't expect them to crack down on drug pricing because it would stifle innovation.
Cramer also expects Republicans to attempt to repeal Obamacare, which could hurt many healthcare plays, but he thinks the Democrats in the Senate will filibuster.
Cramer warned that not all companies are worth owning, as some are engaged in a price war with competitors, such as the wholesale drug distributors.
"For the segments of the health care sector that don't have price wars, I think we need to get a lot more positive because these stocks have more room to run," Cramer said.
Cramer said savvy investors already know to avoid Valeant. He recommended Merck as one of the best to own, as well as Pfizer, Celgene, Allergan and Walgreens Boots Alliance.
Cramer isn't alone in his enthusiasm for Trump's potential
Veteran financial guru Larry Kudlow, who served as the Trump campaign's senior economic adviser, tells Newsmax TV that Trump will live up to his campaign vows to restore prosperity to all Americans and the nation we all love.
"Donald Trump has a very strong economic growth message which is going to be great for the economy and for profits and for businesses large and small," Kudlow said Wednesday to Steve Malzberg on "America Talks Live."
Kudlow, a Newsmax Finance Insider and CNBC senior contributor, said the billionaire real-estate tycoon was successful because he understands the dissatisfaction of "ordinary middle-class folk."
"With Mr. Trump you're going to have across the board tax cuts, you're going to end Obamacare, which is a prosperity killer and a healthcare killer, you're going to take the handcuffs off of energy, you're going to wall back all these regulations and you're going to stop the government from taking over the economy. That's a powerful message," Kudlow said.
Trump "understood that they were angry and that the establishment in Washington and elsewhere was not delivering. He understood that they wanted change and he understood that they wanted to drain the swamp, get rid of the corruption, stop the corporate cronyism," Kudlow said.
"He understood that instinctively and he knew that people were not willing to give up the American dream … I think it was effective and I think he hit it exactly right. He just understood the American people in a way that no other political figure has understood it."
Trump's proposed policies such as tax cuts, higher fiscal spending and simplifying regulation are likely to benefit sectors such as banks and industrials.
Trump has sided with leading conservatives in calling for the repeal of the 2010 Dodd-Frank Financial Reform Act largely opposed by banks.
"The Trump campaign did say it would repeal Dodd-Frank. Rates are higher and the yield curve is steeper. Those are all good things for the banks," Warren West, principal at Greentree Brokerage Services in Philadelphia, told Reuters.
But the possibility of Trump slapping punitive tariffs on exports from some countries such as China has unnerved some investors.
"The markets are adjusting to a new reality and are giving Trump the benefit of doubt," said Adam Sarhan, chief executive officer of Sarhan Capital. "He does have some problems with immigration and with social issues, but his economic policies, at least in the short-term, are perceived to be stimulative and net good for the economy and that's why stocks are rallying."
(Newsmax wire services contributed to this report).
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