U.S. equities rose on Thursday, with the three major indexes on track for their best week of the year, as investors kept adding to risk positions following the presidential election.
The Dow Jones industrial average hit a new all-time intraday high shortly after the open, and traded more than 150 points higher, with IBM contributing the most gains.
“The momentum across the macro universe spawned in the wee hours of the morning after Donald Trump’s shocking victory continues. Traders have driven stocks higher in anticipation of a massive fiscal stimulus,” said Jeremy Klein, chief market strategist at FBN Securities, in a note.
“Although the dollar has soared in the past twenty-four hours, gold has also climbed as inflation expectations have started to build,” he said.
The S&P 500 gained nearly 0.8 percent, with financials rising more than 3 percent to lead advancers. Bank stocks also soared, with the SPDR S&P Bank ETF (KBE) and the Regional Banking ETF (KRE) both rising more than 4.5 percent.
The Nasdaq composite gained 0.9 percent, with the iShares Nasdaq Biotechnology ETF (IBB) ripping more than 3 percent higher.
Donald Trump‘s victory over Democrat Hillary Clinton sent shock waves through global financial markets, with Dow futures falling more than 800 points as election results kept coming in. But Wednesday’s cash session saw a 1 percent rally, as investors and traders unwound several trades associated with a Clinton victory, particularly within the financials and health care sectors.
“There are three things you need to contemplate. First, the lessons learned from Brexit,” said Art Hogan, chief market strategist at Wunderlich Securities. “We know what happens in a Brexit-like sell-off. You get a knee-jerk reaction to the downside and then we move higher very quickly; we just sped up the process on that.”
“Second, it’s the fact that we got conciliatory speeches from both candidates,” he said. “Third, you have the potential for growth policies to be put forward” with Republicans controlling the White House and Congress.
U.S. Treasury yields continued their assent as well, with the two-year note yield around 0.911 percent and the benchmark 10-year yield at 2.101 percent.
“I’m optimistic that we will see faster growth over the next four years with the coming changes in policy (hopefully no trade protection and the economic wars it brings) but in the context of the bond bubble that is now leaking and the collateral asset prices bubbles it has spawned there will be a bumpy bridge between the current environment and fully enjoying the benefits of that hoped for faster growth,” Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
The dollar index, which measures the U.S. currency’s performance against a basket of currencies, rose 0.4 percent Thursday, with theeuronear $1.089 percent. The safe-haven yen fell more than 1 percent versus the greenback, trading around 106.81.
Lukman Otunuga, research analyst at FXTM, said the dollar’s “resurgence was also complimented by the renewed speculations of the Federal Reserve raising US interest rates in December that encouraged buyers to attack. This week’s aggressive dollar rebound may be fully Trump driven with more time needed for the Greenback to find some normality.”
Market expectations for a Fed rate hike in December were around 81.1 percent Thursday morning, according to the CME Group’sFedWatchtool.
On the data front, weekly jobless claims totaled 254,000, below the expected 260,000. Federal budget data for October is also due at 2 p.m. ET. Meanwhile, St. Louis Fed President James Bullard said the central bank is still due for a single rate hike and then hold.
On tap this week:
2:00 p.m. Federal budget
Bond market closed, stock market normal hours
Earnings: Allianz, JC Penney, Brookfield Asset Management
10:00 a.m. Consumer sentiment