Weekend Update, November 11th, 2024
Index, Sector & Asset Performance
Trump wins decidedly along with a projected GOP sweep in Congress and financial markets cheer. Stocks rallied strongly last week, encouraged by Donald Trump’s and the GOP’s victories and the proposal to at least keep the 2017 Trump tax cuts and possibly cut corporate taxes further and lighten businesses’ regulatory burdens. Equity markets vaulted higher in the overnight session and the run continued into Friday’s close. The Russell 2000 (IWM Etf) led the way, up +8.57% and finished near its 2021 all-time high. Bigger cap indexes also surged from +4.6% for the DJIA to +5.7% for the NASDAQ Composite. Stocks closed the week at record highs with the cash S&P 500 at 5995.
As previously anticipated, implied volatility collapsed.
The computers were quick to sort out winners and loser under a Trump 2.0 reverting back to late 2016 and 2017 stock leadership. Per FS Investments, last week’s biggest movers were:
Tesla surged 32% given Elon’s likely influence in the new administration, financials rose +6.28%, and semiconductors gained +7.61%. Interest rate-sensitive sectors were punished. Chinese equities initially pushed higher on further stimulus measures but sold off late in the week while European markets lagged.
Bitcoin rose almost +12% on the week, post-election, and equities leveraged to that trade such as MicroStrategy and Coinbase jumped by +27% and +32% respectively in just 3 trading days. Those names are up another 12-15% this morning.
Fixed income markets were mixed, with interest rate changes ranging from +5 bps in short term rates to -10 bps in longer term Treasuries. Initial post-election moves on Wednesday’s included a sharp selloff which ranged from +8 bps at the short end to +16 bps at the long end. Interest rates initially rose as the election outcome caused concerns about bigger budget deficits and higher inflation. At least that was the story being told in the media. Behind the scenes, the interest rate rise was 90% real growth rates rising on higher growth expectation in 2025.
Economic Indicators and Earnings Commentary
The Fed cut policy interest rates by 25bps on Thursday and kept the easing door open for December. Fed Chairman Powell was asked if he would resign if Pre Trump asked him to, and responded no.
The ISM services survey jumped to 56.0 in October, the highest in over two years. Consumer sentiment jumped as well with the Univ. of Michigan sentiment figure at 73.0 in November, better than expected. Initial jobless claims were 221,000 in the week ending November 2.
Global Market Trends/Commodities/Currencies
Oil finished at $70/bbl. Industrial metals and ag commodities jumped on the week led by lumber.
Gold’s winning streak ended short of $2750/oz closing down on the week on a stronger dollar.
The U.S. dollar (BBDXY) gained 0.31% last week.
OHFG Exclusive Data & Charts: Historical Pre and Post Presidential Election Market Moves. Countdown is On.
Source: Charley Belio, 2024
Other Historic Election Data and Presidential Cycle Data from Fidelity:
Contrary to most thinking, historically, sweeps have not been disasters for the markets. GOP sweeps have been slightly more favorable than DNC ones. 4-year annual return data as compiled by Fidelity:
Oak Harvest Weekly Stock Talk: Trump Wins a Second Term, No Disputing the Votes: Are We Still in a Bull Market?
