Benchmarks ended a holiday-shortened trading session with gains on Friday as investors bet that President-elect Donald Trump’s economic proposals will spur growth. All the three major indexes closed at record highs, while the stock market rally raged into its third-straight week. The Russell 2000 Index of small-cap shares also extended its winning streak to a 15th straight session, its longest stretch of daily gains since February 1996.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) increased 0.4%, to close at 19,152.14. The S&P 500 also advanced 0.4% to close at 2,213.35. The tech-laden Nasdaq Composite Index closed at 5,398.92, gaining 0.3%. The fear-gauge CBOE Volatility Index (VIX) surged 6.4% to settle at 13.23. A total of around 2.96 billion shares were traded on Friday, lower than the last 20-session average of 7.88 billion shares. Trading volume was light as many investors didn’t participate following the Thanksgiving holiday, for which U.S. markets were closed on Thursday. Advancers outpaced declining stocks on the NYSE. For 62% stocks that advanced, 34% declined.
Dow Breaches the 19,000 Mark
The Dow Jones Industrial Average continues to notch fresh record highs, capping a week when the index breached 19,000 for the first time. The index has been rising since the presidential election and has registered third consecutive week of gains as investors anticipate a reduced corporate taxation and regulation, along with greater infrastructure spending, under a Trump administration.
The broader market is benefitting from an exodus of cash from government bonds, real estates and gold. As long as investors also avoid shares of European companies or those in emerging markets, it’s seems pretty difficult to lose money from the Trump rally.
Since the U.S. presidential election on Nov. 8, the Dow is up 4.5%. And if the market continues its uptrend, the index is poised to end the year with around 9.9% gains, its best since 2013. Last week, the blue-chip index shot up nearly 300 points, pulling it up 800 points since the election.
Investors continue to turn toward banks as regulatory burden is likely to ease under Trump’s administration and Republican controlled congress. One such change will be the raising of the minimum asset threshold for banking behemoths to $250 billion from $50 billion, which will lend more flexibility, boost valuations, strengthen consolidation and increase lending. Trump, in the meantime, views the Dodd-Frank regulatory overhaul as a harsh measure, especially, on smaller banks. As investors’ eye relaxation under Trump, financial behemoths like The Goldman Sachs Group, Inc. (GS - Free Report) have seen its shares surge 10% since the Election Day. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Trump’s business tax plan, meantime, should also benefit biotech companies. He plans to trim business tax rate to 15% from 35%. The lower tax burden is expected to boost profits for large biotech companies. The chemical industry is also reeling under such tax burden. America’s corporate tax rate is the highest among the Organization for Economic Co-operation and Development countries.
Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. He said that he will support more spending on transportation and telecommunications infrastructure, clean water and electricity transmission in order to accelerate economic growth. He is expected to offer $137 billion in tax credits to private construction companies undertaking infrastructure projects.
It is the third consecutive week of gains for stocks as investors have bet on expectations for reduced corporate taxation and regulation and greater infrastructure spending. For the week, the Dow, the S&P 500 and the Nasdaq are up 1.5%, 1.4% and 1.5%, respectively.
Stocks That Made Headlines
Aon plc to Expand Reach in Brazil with Admix Buyout
UK-based insurance giant Aon plc (AON) announced an agreement to acquire Admix –– a leading health and benefits brokerage and solutions firm in Brazil (Read More)
J&J Confirms it Approached Actelion for Possible Deal
Johnson & Johnson (JNJ - Free Report) confirmed that it approached Swiss biotechnology company, Actelion Ltd. (ALIOF - Free Report) , with a takeover offer (Read More)
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