Trump backlash adds new risks to the stocks the government owns

The stock rally driven by President Donald Trump's government ownership stakes in companies has introduced new risks heading into the midterms. As Democrats appear poised to take a majority in at least one chamber of Congress, market strategists warn that Washington and the courts may scrutinize the administration's equity positions, potentially reversing the momentum that lifted these stocks.

Analysts note a lack of litigated precedent for this interventionist approach, which could lead to volatility. Some stocks, like Trilogy Metals, have experienced rapid price spikes that quickly reverted to the mean. Intel's performance has been mixed, benefiting from AI-related demand but also facing a shareholder lawsuit and the uncertainty of a potential Democratic takeover of Congress, which could lead to investigations and hearings.

The legal challenges to the government's investment strategies, particularly under the Chips Act, could have broader implications for similar deals.