Markets Rally After Trump Victory

While last week was dominated by election news about red states and blue states, the markets were awash in green. The major Markets saw gains across the board with the greatest gains in the Nasdaq followed by the S&P 500. Without a doubt, the biggest headline event last week was the news that Donald J Trump won the presidential election, securing 312 electoral votes. This makes him the first and only president since Grover Cleveland to be set to serve two nonconsecutive terms as President.

The day after the election saw the best post-election day performance of the S&P 500 with an impressive gain of 2.5% . It’s difficult to directly tie a signal event, especially around politics, to the performance of the stock market. That said, the gain of 2.5% Wednesday was only slightly better than 2020’s post-election day performance.

Tesla was one standout performer last week as the company rose 14.75% the day after the election and logged a weekly gain of 29% percent. This optimism was fueled by the idea that Elon Musk’s strong support of the President Elect would be a boost for the company as well, with Trump having secured the presidency. 

Tesla’s surge in performance was a significant contributor to the 7.62% weekly gain in the Consumer Discretionary sector. However, the gains in the Stock market were also widespread as every sector closed higher with the smallest gains in Utilities at 1.19%. 

Small and Mid-cap stocks fared even better with gains as high as 8.6% in the Small Cap 600 Growth index. 

Flying somewhat under the radar last week due to the political developments was the FOMC Meeting midweek. This meeting saw a 25% basis point cut to the Fed Funds rate, which was widely expected. Presently, the odds of another 25-basis point cut in December remains the highest probability. Yet, the odds for additional cuts to the Fed Funds Rate have fallen as of late. The CME Group’s Fed Watch Tool has the market anticipating rate cuts stalling out at 4 percent level with only a roughly 60% chance that rates will be at or below this level at the end of 2025. 

https://www.cnbc.com/2024/11/04/what-the-stock-market-typically-does-after-the-us-election-according-to-history.html

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