It’s been two weeks since Donald Trump was elected the 45th President of the United States. As shocking as his election was to some, the response in the stock market has been equally surprising. The Trump Rally has taken stocks to a place few would have thought possible, especially the night of his election: new all-time highs.
Considering that Dow Futures were down more than 800 points on Election Night, the upward trajectory of the market in the two weeks since has been pleasant surprise for investors. Who knows how sustainable the Trump Rally is, especially with the Fed almost certain to raise interest rates by another quarter-point by year’s end. So far, though, it’s been pretty resilient.
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Here’s what has happened since Trump won the election:
- After months of stagnating, the S&P 500 has topped 2,200 for the first time ever.
- The Dow Jones Industrial has rallied more than 600 points—a turnaround of more than 1,400 points since Dow Futures tumbled 800 points the night of the election.
- The Nasdaq has reached new all-time highs.
- Infrastructure stocks such as Alcoa (AA), AK Steel Holding (AKS) and U.S. Steel (X) are up more than 20% thanks to Trump’s vows to devote gobs of money to improving America’s roads, bridges, buildings, etc.
- Small-cap stocks have been on a tear. The S&P 600 Small Cap Index is up 11.5%, outpacing the S&P 500 by nearly a 4-to-1 margin.
- Financials have made their biggest jump in years. The Financial Select SPDR ETF (XLF) has climbed 11.5%, while big banks such as JPMorgan Chase (JPM) (18.7%), Citigroup (C) (19.7%) and Goldman Sachs (GS) (27%) have been among the top performers.
- Stock volatility has all but dried up, with the VIX hitting its lowest level in two months.
November is typically a good month for stocks, the traditional launching point for the market’s “best six months,” as dubbed by the auspicious Stock Trader’s Almanac. But the market usually needs a week or two to wrap its head around the new President in an election year, and most analysts thought that would certainly be the case with a candidate as controversial as Trump. Instead, Wall Street has immediately embraced Trump’s election. And with the holiday shopping season nearly upon us, things could only get better—at least until the Fed intervenes.
The Trump Rally in the U.S. stock market appears very real, with various indexes and sectors flourishing. Even if it comes as a bit of a shock, my advice is embrace the rally by putting more cash to work, as most of our advisors are recommending.
It may be fickle—perhaps the Trump Rally will evaporate once Trump actually takes office and starts backpedaling on some of his campaign promises (which he’s already started to do in some cases). But that’s all the more reason to strike while the iron is hot. If you like growth stocks with lots of momentum, bank stocks, small cap biotechs and infrastructure stocks are a good place to start.
If you want specific momentum-stock recommendations, you can subscribe to Cabot Top Ten Trader by clicking here.
Happy Thanksgiving!
