Two days does not an economic trend make, but the early reaction from the U.S. stock markets to the election of Donald Trump as president can be described as enthusiastically bullish.
As the president-elect was meeting with President Obama at the White House Thursday to discuss the transition between the two administrations, the Dow Jones Industrial Average was on its way to a historic day.
The Dow closed Thursday at a record high — 18,807. In the two days since the election, the market has risen 568 points, or a little more than 3 percent.
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That’s in sharp contrast to the panic that overtook some investors during Tuesday night’s election results when Trump’s victory seemed possible. At one point, the Dow’s futures market dropped by 800 points in after-hours trading.
That massive decline prompted some on the left to have a “see-I-told-you-so moment” about what a Trump presidency could mean for the global financial markets.
The reality was investors, like most of the general pubic, had anticipated a Hillary Clinton victory heading into Tuesday, and so many of their portfolios were laden with stocks in fields such as health care and finance where a Clinton presidency was expected to focus its economic policies. When a Trump victory seemed plausible, investors scrambled to adjust to markets that could be favored by a Trump win, such as those related to infrastructure, which Trump has promised to invest in early in his presidency.
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The worry subsided when markets opened Wednesday and the Dow quickly went into positive territory. The winning streak continued Thursday.
The other key U.S. markets have also risen since the election results became official. The S&P 500 index is up 23 points since the opening of trading on Wednesday (a 1 percent increase) and the tech-heavy Nasdaq, which enjoyed big gains Wednesday, gave some of that back on Thursday, but is still up 15 points since the election (an increase of 0.2 percent).
JPMorgan told clients of its firm Thursday the stock market rally is expected to continue through the end of the year, at least, due to optimism about the Republican economic agenda.
“We interpret the U.S. election outcome with a Republican sweep as pro-growth for equities,” strategist Dubravko Lakos-Bujas wrote.
Another financial analyst said the calls for unity among both parties and the way with which Democrats conceded defeat helped calm the markets after Tuesday night’s dramatic swing.
“The 2016 election actually played out according to historical norms,” said Nicholas Colas, chief market strategist at Convergex. “Americans voted, a clear winner emerged and his party converged around him, the loser conceded, and the sitting president gave the customary unity speech. That such a dramatic and divisive election was settled in such a prosaic way was very good news indeed. As for the coming days, we see equities continuing to move higher.”
A business author said economic growth of the Obama administration had lagged behind market expectations and an anticipated new direction would be welcomed from a Trump administration.
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“The economic recovery under President Obama never reached deep enough — it did not bring working-class people up,” said Justin Gest, author of a new book The New Minority: White Working Class Politics in an Age of Immigration and Inequality. “And the nature of the economy that Wall Street and corporate America has promoted reflects the gaping inequality in this country.”
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