The 2 things that will drive the stock market after last week’s Trump-Fed
President Donald Trump looks on as his nominee for the chairman of the Federal Reserve Jerome Powell takes to the podium during a press event in the Rose Garden at the White House, November 2, 2017 in Washington, DC.
Drew Angerer | Getty Images
Talk about an eventful week.
Normally, when the Fed cuts interest rates, that would be the big story.
However, Thursday’s Federal Reserve meeting pales in comparison to Tuesday’s presidential election, which yielded a winner before the sun came up the next morning.
Performance since Nov. 1 close
The stock market reaction Wednesday to Republican Donald Trump‘s victory over Democrat Kamala Harris was swift and powerful, sending the Dow, the S&P 500 and the Nasdaq to all-time highs. The Fed rate cut the next day was icing on the cake for market bulls, with gains for the S&P 500 and Nasdaq. The Dow on Thursday was flat. On Friday, the Dow went above 44,000 for the first time ever, and the S&P 500 topped 6,000 for the first time ever. They closed just below those levels. All three stock benchmarks finished the week at closing record highs.
For the week, the Dow and S&P 500 both gained more than 4.6%. They had their best weeks of the year and their first positive weeks in the past three. The Nasdaq rose 5.7% for the week. The tech-heavy index’s weekly gain, while the strongest of the three, was only its best since September. For the week, consumer discretionary, energy, industrials, financials, and information technology were the top five sectors.
s&p 500 sectors for the week
| Sectors | WTD change | YTD change |
|---|---|---|
| Consumer Discretionary | 7.62% | 22.81% |
| Energy | 6.16% | 12.16% |
| Industrials | 5.93% | 24.41% |
| Financials | 5.53% | 30.46% |
| Information Technology | 5.44% | 36.14% |
| Communication Services | 3.72% | 34.93% |
| Real Estate | 2.67% | 9.35% |
| Health Care | 1.57% | 9.95% |
| Materials | 1.46% | 9.99% |
| Utilities | 1.20% | 24.72% |
| Consumer Staples | 1.20% | 14.31% |
Source: FactSet
- Last week, we sold shares of industrial laggard Honeywell into strength three times, bringing the position down to levels that Jim Cramer said won’t hurt us. On Wednesday, when the already running Wells Fargo and Morgan Stanley both surged double-digits on a percentage basis after the Trump win, our discipline called for us to take some profits, which we did. BlackRock, one of our newer positions, was not participating in Wednesday’s rally in financials, so took some of those bank stock proceeds and bought some more shares of the world’s biggest asset manager.
We said last weekend that the risk to the market was not so much who won, but that whoever won did so decisively. That’s exactly what we got.
Wall Street, however, has traditionally liked gridlock in Washington over the long term, a situation created by a split Congress or the White House controlled by one party and Capitol Hil by the other. The exact combination remains up in the air. While the presidential race was decided quickly and the Republicans flipped the Senate, there were still House races too close to call, according to NBC News. As…
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