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After The Close - The U.S. stock market registered a solid run-up on Wednesday afternoon, as investors processed the election of Donald Trump to the Presidency. Stocks had generally been positioned to assume that Hillary Clinton would win the office, which led to a precipitous sell off in overnight trading as Mr. Trump’s path to victory widened. Then, after he delivered a speech that was notable for its gracious and unifying tone, sentiments softened somewhat. The steep losses narrowed as the morning bell rang, and eventually gave way to gains in many sectors and indexes. The choppiness returned after the opening bell, but that ultimately gave way to the bulls by the midday. As we approached the closing hour in New York, all three of the major market indexes had gained solidly on the day, with the Dow Jones Industrial Average posting a 257-point advance.

While what politicians say on the campaign trail often differs greatly from the actual legislation enacted during their term, the bulls had a firm hold on several pockets of the equity market. So, with the Affordable Care Act possibly set to be overturned, the healthcare sector put in a solid gain today. Similarly, financials was also among the best-performing sectors today. The grouping historically benefits from higher inflation and interest rates, two likely outcomes from yesterday’s vote. Overall, it appears most investors were looking on the bright side today, cautiously accepting the conciliatory victory speech offered by Mr. Trump last night.

Meanwhile, December’s Federal Reserve meeting on monetary policy is expected to result in an interest rate hike. The central bank has offered mixed messages on the timing of an increase in previous months, citing slower-than-expected economic expansion and the election as reasons to delay an increase. Now, most expect the Fed to finally boost the rate. We believe any further delay would hurt investor confidence and further destabilize trading as the new year approaches.

So, in our view, there remains plenty of volatility on the horizon. The markets will digest the election results for weeks, maybe months to come, as traders ascertain the potential impact of Mr. Trump’s policies. Couple this with the looming interest rate decision by the Fed, and investors will have ample data and information to trade on for the foreseeable future. – Robert Harrington

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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2:30 PM EST - What a difference a few hours can make. To wit, during the overnight hours following the surprise victory in the Presidential election by Donald J. Trump, the U.S. equity futures along with most of the stock markets around the globe were sharply lower. In all, the Dow futures were off by some 800 points.

Then, as morning dawned, the futures made something of a comeback, notably halving their worst deficits of the overnight hours. In fact, as Wall Street opened, the market began trading on an even keel. It has garnered strength from there, and continued to rise right through the mid-afternoon.

In all, the Dow now stands at its high for the day up nearly 230 points, while the S&P 500 Index and the NASDAQ are up strongly as well. Behind this apparent reappraisal of the election results are some hopes in certain industries, such as steel, mining, health care, and the financials that the incoming Administration will look favorably on these sectors. So, they are rising as part of a bullish stampede this afternoon. - Harvey S. Katz

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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11:55 AM EST - The major market averages bounced in and out of positive territory in the first hours of trading after Donald J. Trump won the U.S. Presidential election over Hillary Clinton in a very contentious campaign for the White House, but are now moving to the upside, coinciding with unifying remarks from Speaker of the House Paul Ryan. Still, we expect the volatility in the market to pick up over the coming days and weeks, as the market continues to digest what the surprising win will mean for the international equity markets. Overnight, the major equity futures fell considerably when the odds were looking like the Republican nominee would win the election. However, the move lower was quickly reversed at the start of trading and the major indexes actually opened on the flat side. There appeared to be some algorithm-based short covering at the start of trading on the heels of the pre-market selling, which also was capped by some market circuit breakers late-last night.

What we are seeing today, amid the uncertainty about the ramifications of the election outcome, is some notable sector rotation. Being helped by the Trump win are the metals and mining stocks, the coal issues, and some of the drug and bank stocks. The increase in fixed-income rates (which hit their highest intra-day level since March) and the possibility of looser regulations on the financial services companies is helping the sector, while the stocks of the drug companies are being help by sentiment that they will probably face less scrutiny over drug pricing under a Trump Presidency. Conversely, the Trump news is hurting the shares of the hospital and managed care companies, which would likely suffer if the Affordable Care Act is repealed, which would appear to be a high priority of the Trump Administration. There also is weakness in the shares of the international consumer packaged goods companies. We would not be surprised if some notable sector rotation continues for the foreseeable future as investors weigh the economic and industry-specific effects of the Trump Presidency.

As noted, there has been a notable move in the fixed-income market (the yield on the benchmark 10-year Treasury note is approaching 2.0%) and the currency markets. The strength in the U.S. dollar is behind the notable moves in both sectors, with most of the international currencies, save for the Russian currency, under pressure today. We also are seeing some buying in the gold market, which may be a play against the aforementioned uncertainty following the election.

Meantime, it should be noted that the small- and mid-cap markets are faring a bit better today than the larger-cap sector. We think this is because President-elect Donald Trump campaigned on a protectionist platform and an anti-trade agenda, which are seen as favoring the more domestically denominated companies than the large–cap, export-driven multinational entities. The possibility of a repeal of the ACA also would seem to be a plus for the smaller-sized companies, given escalating premiums and deductibles.

Looking ahead to remainder of the session, it is hard to predict how the equity market will fare, as there are so many new variables in play that may drive trading in the broader market and, maybe more so, the 10 major equity groups. Stay tuned. - William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - The election is over and Donald J. Trump has scored a rather convincing victory in the Electoral College following a hotly contested and often fractious campaign. This victory followed an unsettled two weeks on Wall Street ahead of the election, which had seen, respectively, nine consecutive daily declines in the market and back-to-back wins for the bulls on the day before the vote and on the day of the contest. In all, the 11 days saw the Dow Jones Industrial Average fall below 18,000 and surge past that mark.

As to yesterday's session, stocks started the day somewhat lower, which was not all that surprising given that the Dow had jumped 371 points on Monday and at least a half-hearted attempt at a Monday-Tuesday reversal seemed logical to expect. And, indeed, that is what we got, with the Dow falling some 60 points early. The other large-cap indexes also stumbled out of the gate. However, when the sellers could not gather any meaningful momentum, the buyers resurfaced.

The comeback began hesitantly and we still were holding losses through mid-morning when the buying became more serious. In fact, as the lunch hour arrived on the East Coast, the market had turned nicely positive, with the Dow advancing by better than 100 points. The gains were spread around with the mid- and small-cap indexes joining the parade higher on some apparent expectation that the pre-election polls would prove on the mark, which, obviously, they did not. 

The buying persisted into the afternoon, but as we moved into the final 90 minutes of trading, some hesitancy ahead of the election results contributed to a diminution in the gains, with the gain in the Dow, once some 140 points, being cut in half as the afternoon wore on. The leadership was largely supplied by the larger industrials, such as 3M Company (MMM Free 3M Stock Report). However, the drugstore giant CVS (CVS) went in the opposite direction falling sharply on disappointment in its quarterly results.

In other news, the stock market seems to be pricing in an interest rate hike next month by the Federal Reserve, with the latest odds for such a monetary adjustment climbing past 80 percent. The Fed is scheduled to meet during the middle of next month. It was at its December 2015 gathering that the central bank last raised interest rates, in what was then the first time for such a monetary move in about a decade.  

As the afternoon wound down, meantime, and with no clear indication of how the voting was proceeding, the market continued to hold higher, but not decisively as it had on Monday. Moderate gains then persisted into the close, with the final tallies showing gains of 73 points for the Dow, eight points for the S&P 500 Index, 27 points for the NASDAQ, and a scant two points for the Russell 2000 Composite, the small-cap benchmark.

Then, after the returns came in, the markets initially tumbled overseas. However, following Mr. Trump's victory speech and the conciliatory note it struck, the markets began to turn around across the globe, although they remain in the red. As to U.S. futures, after the Dow fell about 800 points, a comeback of sorts has evolved and those futures are now off a somewhat more manageable 350 points. So, at this time, a lower open beckons on Wall Street, and plenty of volatility to follow. - Harvey S. Katz

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.