Post-Election Market Surge: Interpreting the Data
To say the market responded enthusiastically to the results of the November election would be an understatement.
On the first day of trading following the election of former President Trump, and the Republican party winning a majority in the Senate, the S&P 500 Index leapt nearly 2%. The Dow was up over 3%. The NASDAQ rose more than 2%, and Small Caps, measured by the Russell 2000 popped nearly 5%. That was in the first couple of hours of trading.
Soaring Stock Prices: Individual Company Highlights
As eye popping as those numbers are, some individual stocks soared even more. Tesla was up nearly 12% in the first hours of trading. That company’s boss Elon Musk was a huge supporter of Trump. Yahoo Finance reported he contributed more than $132 million to his campaign, and there’s speculation that he may have some influence on policy.
Major banks were up between 7% and 11%. Wells Fargo analyst Mike Mayo wrote that the Trump win starts a “new era after 15 years of harsher regulation that followed the 2008 crisis.
Quick disclaimer: mentioning these stocks is not an investment recommendation. We are simply reporting what happened this week.
Investor Expectations: Lower Regulations and Taxes
Investors and corporations have high expectations that a Trump presidency will lead to lower regulations and lower taxes.
Cautioning Against Emotional Investing
A reminder on this week’s Fastest 4 that things are never as bad, or as good as they seem.
We’ve spent lots of time on this segment urging you as an investor to not let bad news lead you to making bad decisions, like selling during a market downturn.
The opposite here is true. The exuberance over what a second Trump presidency could bring will fade, and normalcy will return to the market. Stock prices will again be driven by corporate earnings and profitability, and other economic data. Don’t get lured in to what could-be and go all-in on the wrong stock. That could put your financial independence at risk.
Navigating Policy Changes: Uncertainty and the Importance of Long-Term Strategies
How the new government works with the new President on his agenda, working through campaign promises like tariffs, inflation, and immigration cannot be known. The legislative result of that work cannot be known. What can be know is that history tells us the stock market is a great long-term builder of wealth.
You should stick to your long-term investment strategy. One that hopefully has been created with the help of a financial advisor.
There are certainly potential opportunities that could be more attractive under one political party versus another, or one President over another, but navigating that with a professional, determining how it fits into your overall financial plan, and the right allocation strategy is more prudent way to make your investment decisions.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance. Independent Advisor Alliance and GenWealth Financial Advisors are separate entities from LPL Financial.
