{"id":169672,"date":"2024-11-07T03:05:01","date_gmt":"2024-11-07T03:05:01","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/11\/07\/us-stocks-sp-500-sees-best-post-election-day-in-its-history-times-of-india\/"},"modified":"2024-11-07T03:05:02","modified_gmt":"2024-11-07T03:05:02","slug":"us-stocks-sp-500-sees-best-post-election-day-in-its-history-times-of-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/11\/07\/us-stocks-sp-500-sees-best-post-election-day-in-its-history-times-of-india\/","title":{"rendered":"US stocks: S&P 500 sees best post-election day in its history – Times of India"},"content":{"rendered":"
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The S&P 500 climbed 2.5% on bets the newly elected president will enact pro-growth policies that will boost Corporate America.<\/span><\/div>\n<\/section>\n<\/div><\/div>\n

Stocks hit all-time highs, US yields jumped and the dollar saw its best day since 2022, with investors mapping out Donald Trump<\/a>\u2019s return to presidency and the potential for Republicans to win both houses of Congress.
The S&P 500 climbed 2.5% on bets the newly elected president will enact pro-growth policies that will boost Corporate America. The benchmark had its best post-Election Day in history, according to data compiled by Birinyi Associates Inc. and Bloomberg. A gauge of small caps rallied 5.8% amid speculation they will benefit from Trump\u2019s protectionist stance, while wagers on lower taxes and reduced regulation lifted banks. Insurers focused on the Medicare market jumped on expectations the new government will pay higher rates to companies that provide private versions of the US health program for seniors.
Wall Street\u2019s \u201cfear gauge\u201d \u2014 the VIX \u2014 tumbled the most since August. Almost 19 billion shares changed hands on US exchanges, 63% above the daily average in the past three months. The Dow Jones Transportation Average jumped to a fresh high after a three-year drought of records, finally confirming the strength of its industrial counterpart. The breakout is a bullish sign to followers of an investing framework known as Dow Theory that says synchronized gains in both gauges portend better times ahead for the broad market.
\u201cFor now, investor sentiment is pro-growth, pro-deregulation, and pro-markets,\u201d said David Bahnsen, chief investment officer at The Bahnsen Group. \u201cThere is also an assumption that M&A activity will pickup and that more tax cuts are coming or the existing ones will be extended. This creates a strong backdrop for stocks.\u201d
Treasury yields climbed across the curve, with the move led by longer-term bonds as traders slashed wagers on the scope of rate cuts by the Federal Reserve. Investors have doubled down on bets for policies such as tax cuts and tariffs that could trigger price pressures. The moves also signal worries that Trump\u2019s proposals will fuel the budget deficit and spur higher bond supply.
US 10-year yields advanced 17 basis points to 4.44%. A dollar gauge added 1.3%, with the yen leading losses in major currencies and the euro down 1.8%. The Mexican peso was almost flat after sinking as much as 3.5%. Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, hit a record high. Commodities came under pressure, with gold and copper tumbling. Oil edged lower.
\u201cThe biggest takeaway from last night is that we received certainty that the market craves,\u201d said Ryan Grabinski at Strategas. \u201cThis will allow both business and consumer confidence to improve. Attention now should shift to the Fed meeting tomorrow. The 10-year is approaching the 4.5% level, that\u2019s the level risk assets ran into some trouble in the last 24 months.\u201d
The S&P 500 hovered near 5,930, notching its 48th all-time high this year. The Nasdaq 100 added 2.7%, hitting its first record since July. The Dow Jones Industrial Average climbed 3.6%. A gauge of the \u201cMagnificent Seven\u201d megacaps also hit a record, led by Tesla Inc.\u2019s 15% surge. Trump Media & Technology Group Corp. jumped 5.9%. In late hours, Qualcomm Inc, the world\u2019s biggest seller of smartphone processors, gave a bullish sales forecast.
With many investors braced for a prolonged period of uncertainty, simply gaining some clarity on the outcome is providing a sigh of relief, according to Keith Lerner at Truist Advisory Services Inc. He says the market currently appears more focused on the positive aspects of Trump\u2019s agenda with less emphasis on the potential of tariffs and wider policy outcomes.
\u201cMarkets are pricing in most of the positives today, though the backdrop is complex, and rates, deficit concerns, the potential for fewer Fed rate cuts, and tariffs could eventually provide a counterbalance to today\u2019s upside price shock, he noted. \u201cStill, the weight of the evidence in our work indicates the bull market still has some longevity left, and we are sticking with the primary market uptrend.\u201d
At Macquarie, Thierry Wizman says traders have to be mindful about pushing the \u201cyield story much further.\u201d
\u201cIf there\u2019s a surprise coming from Trump in the next few months (at least relative to hyped-up expectations), it will be about fiscal restraint \u2014 rather than fiscal irresponsibility. When the market realizes this, long-term UST yields could stabilize or decline.\u201d
To Mark Haefele at UBS Global Wealth Management, the bond selloff has gone too far. He expects the Fed to stay on a path toward lower rates.
Fed officials are widely expected to lower their benchmark interest rate on Thursday by a quarter percentage point, a move that will come on the heels of a half-point cut in September. They have projected one more quarter-point cut this year, in December, and an additional full point of reductions in 2025, according to the median estimate released in September.
\u201cThe Fed is still likely to cut by 25 basis points at Thursday\u2019s meeting and likely to cut again in December,\u201d said Yung-Yu Ma at BMO Wealth Management. \u201cAs we move into 2025, we believe it\u2019s possible that we only see two or three cuts for the year depending on the mix of policy and growth that plays out.\u201d
The makeup of Congress will also be key going forward.
Democrats\u2019 hopes to control the US House are fading, with Republicans increasingly confident they will hold unified control in Washington ahead of next year\u2019s big fights over tax cuts and spending. Democrats need a net gain of just four House seats to wrest the slim majority from Republicans, but GOP gains in races in Pennsylvania, Michigan and North Carolina have offset losses in New York, putting the party ahead in its bid to retain control of the chamber.
A \u201cRed Wave,\u201d consisting of Republican control of the executive and legislative branches, has occurred only eight times since World War II, according to Sam Stovall at CFRA.
Under this scenario, the S&P 500 posted its highest average annual price increase for a Republican president at 12.9%, accompanied by a 75% frequency of advance, he said. The best return under a Democratic president occurred just six times under a split-Congress scenario, during which the S&P 500 gained an average 16.6% in price and rose 83% of the time.
\u201cAssuming the House goes Republican, we expect that a \u2018Red Sweep\u2019 outcome will play out in a similar fashion to the 2016 playbook but to a lesser degree given a more mature economic backdrop and higher equity valuations,\u201d said Jeff Schulze at ClearBridge Investments. \u201cBusiness animal spirits could be rekindled once again from Trump\u2019s pro-business approach.\u201d
Schulze says that which could lead to a more robust capital expenditures and investment environment. A more favorable corporate tax regime, full extension of the Tax Cuts and Jobs Act, and a lighter regulatory touch should outweigh the potential headwinds from increased tariffs and reduced immigration on corporate profits.
\u201cWe expect cyclical leadership to continue in the coming months as the market anticipates stronger economic growth and better earnings delivery from this cohort than is currently priced,\u201d Schulze noted.
Stocks Hit Fresh Highs as \u2018Red Sweep\u2019 Wagers Grow
\u201cFavorable macro drivers still dominate, and the prospect of a Republican sweep and lower taxes is adding to the market enthusiasm,\u201d said Ma at BMO. \u201cThat may get tempered in the coming weeks by more details regarding tariff policy or a continued rise in long-term Treasury yields, but for the past two years we\u2019ve said that the environment is favorable for risk-taking and that remains the case.\u201d
In addition, the potential for extension of personal tax cuts under a Republican sweep are only marginally positive for the equity markets, he noted. Corporate tax cuts are much more significant, and while there have been promises to do more on this front, they come with unclear stipulations, including requirements that companies keep manufacturing operations in the US,\u201d Ma concluded.
The stock-market surge unleashed by Trump\u2019s presidential victory is triggering buy signals for rules-based investment funds, adding fuel to the rally.
\u201cThe year-end rally starts today and may be higher than investors were expecting,\u201d Scott Rubner, a tactical specialist at Goldman Sachs Group Inc., wrote in a note to clients Wednesday. Behind it, he cited \u201cunwinds of election hedges, re-levering, Buybacks, FOMO, Vanna,\u201d a type of buying tied to the periodic expiration of option contracts.
Volatility-controlled funds are expected to buy $50 billion of US shares in the next month and a total of $110 billion through January, according to an analysis by Nomura.
\u201cMarkets hate uncertainty and now that the election is officially over, stocks are soaring today,\u201d said Ryan Detrick at Carson Group. \u201cOptimism over tax cuts, a still dovish Fed, and a potentially better economy are part of it, but the reality is the economy has been quite solid all year, so this really isn\u2019t anything new. Back to your regularly scheduled bull market is how we see it.\u201d
At Ameriprise, Anthony Saglimbene says animal spirits through year-end could push major averages higher as the overhang of the election is removed and investors look to put excess cash to work in equities
\u201cFinally, US stocks may see tailwinds from not only the election results but a retreat in volatility hedging, corporations moving out of their buyback blackout periods as the earnings season winds down, and strong fourth-quarter seasonality factors (particularly in election years).\u201d
Chris Senyek at Wolfe Research says he remains bullish on stocks into year-end.
\u201cWith Donald Trump winning the 47th Presidency of the United States, we believe that markets will heavily favor financials, US-based industrials (transports), energy, and crypto today and into year-end, he said. \u201cWe think more offensive tech outperforms as well with semis outperforming. By style, we\u2019d own value, equal weight, small-cap and year-to-date laggards.\u201d<\/div>\n