The stock market swung widely following a surprising General Election result on Tuesday, but has risen dramatically within the past two days following president-elect Donald Trump’s victory as the market opened with substantial losses but rallied quickly and unexpectedly.
Most stock indexes closed at record highs, boosted by financial and industrial stocks, reports Reuters. The Dow Jones rose by just over 218 points or 1.17 percent, the S&P 500 increased by only two-tenths of a percent, and the NASDAQ was down 42, or .81 percent, at the end of trading Thursday. Although U.S. equity markets clearly showed a preference for a Clinton presidency before the election, it appears the uncertainty of a Trump administration is being overtaken by a hope that the former real estate magnate will enact pro business policies.
“Optimism took over and it continues to be the market’s mantra,” said chief investment strategist, Brian Nick, of TIAA Global Asset Management. “Optimism about the agenda, optimism about growth moving forward. The market is looking to 2017 and saying, ‘maybe we’ll have the right mix of taxes and growth.’”
The banking industry has been especially quick to embrace a Trump presidency. Regulations that were put in place during the Obama administration have the potential to be weakened, or rolled back completely. Trump is seen as a potentially strong ally to pro-business interests that have been more restricted during the past eight years.
“Bank stocks have been besieged by Dodd-Frank regulations and a climate not conducive to supporting a stronger level of economic growth,” said Bill Smead of Smead Capital Management in Seattle.
Whether or not Trump will have enough political capital to slash regulations despised by the banking industry still remains to be seen, but the industry’s optimism has certainly boosted the market.
[CNBC] [Reuters] [Wall Street Journal] [Photo courtesy