Today’s major market indices climbed to new record highs. I’m calling the stock market’s gains today the Trump Bump. Stocks soared after Donald Trump’s decisive victory as investors contemplated the potential impact of Republican policies. There was great strength in financials, consumer discretionary, energy, and industrials sectors. The charge higher in today’s stock market was led by small cap companies, which you can see represented by the Russell 2000 index in the graph below.
For many years, I have written my Market Update when three or more of the major indices rise or fall > 3%. Today’s Trump Bump lifted all the indices nearly 3% or more.
Today’s stocks surge came on the hope that the new administration could help businesses and the economy grow more quickly. Stocks that performed best tended to be ones closely tied to potential U.S. economic power that could potentially be unleashed with less regulation and a more protectionist stance. But, the post-election enthusiasm didn’t extend to fixed income. So, bonds fell. Yields, which move the opposite direction of Treasury notes, set new four-month highs on worries that Trump’s tariff and tax agenda could spark inflation. Trump’s tariff-driven policy plans gave the U.S. dollar a lift against other currencies. The greenback enjoyed its biggest one-day gain since June 2016.
Though today’s 3.57% gain in the Dow Jones Industrial Average was no where near a record move up, the indexes’ 1,508 point jump was the the 4th biggest in history. For perspective, see the table below.
The Dow Jones Industrial Average’s gain of nearly 3.6% was its biggest one day jump since November 2022. What Trump’s win means to the market and the economy going forward is left to be seen. Investors seem to be willing to bet the “Crypto President” and a president who is friendly to corporate America is bullish for the stock market.
“In the short run, the market is a voting machine. In the long run, it is a weighing machine.”
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