Staff Reporter
US markets kicked off Donald Trump’s presidency with a robust rally, led by the Dow Jones and small-cap stocks. While the Nasdaq lagged, it still closed higher despite pressure on major tech shares like Apple.
More than 400 stocks in the S&P 500 saw gains, pushing the index up nearly 1%. Investors are anticipating Trump’s announcement of a new investment initiative in artificial intelligence, backed by SoftBank Group Corp., OpenAI LLC, and Oracle Corp.
The Dow was the standout performer, soaring over 500 points—an increase of more than 1.2%—driven by strong earnings from 3M Company (MMM).
Trump’s series of executive orders provided a boost for space-related stocks but negatively impacted electric vehicle manufacturers. Meanwhile, an ETF focused on major Chinese companies rose, as the new president has opted not to impose tariffs on the country—at least for now.
In extended trading, Netflix shares jumped 14% after surpassing expectations and reaching over 300 million paid subscribers.
The yield on 10-year Treasuries fell by seven basis points to 4.56%, while the Bloomberg Dollar Spot Index remained relatively stable.
During Joe Biden’s presidency, the Dow Jones Industrial Average rose by 39.4%. This is about 18 percentage points lower than the gains seen during Donald Trump’s first term and over 100 percentage points less than the 149.4% increase during Barack Obama’s eight years in office, according to data from Bespoke Investment Group.
“Although the Dow’s performance under Biden was the weakest among the last three presidents, it’s still noteworthy, marking a third consecutive term of strong gains,” Bespoke noted. “These performance figures remind investors not to let political views influence their investment choices.”
Since 1993, the top four sectors from Election Day to Inauguration Day have averaged a calendar-year gain of 17%, outperforming the S&P 500’s average rise of 15.9% about 75% of the time, according to Stovall. Furthermore, the top 10 S&P 500 sub-industries achieved an average calendar-year increase of 26.8%, also beating the market 75% of the time.
Investors are showing early signs of optimism that under Donald Trump, equity laggards may rally based on expectations of a less aggressive approach to global trade, according to a recent survey by Bank of America Corp.
If worries about Trump’s tariff proposals turn out to be “unfounded,” investor allocations are likely to remain risk-on, allowing stock markets that have lagged behind the recent surge in the US to catch up, said BofA strategist Michael Hartnett.
HSBC describes the latest dovish inflation readings as “game-changers,” suggesting they could create an ideal environment for risk assets in the months ahead.
Led by strategist Max Kettner, HSBC’s team anticipates only minor drawdowns in the near future and recommends using any dips to increase exposure to risk assets. They note that sentiment and positioning indicators are still signaling a buy.
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