US stocks rally as Trump seen pursuing business friendly policies
Banks and drugmakers frolic on Republican victory
US stocks rose in heavy trading, with the Dow Jones Industrial Average briefly eclipsing its all-time closing high, as shares of banks to heavy equipment manufacturers rallied amid speculation Donald Trump will pursue business-friendly policies.
Health-care shares and lenders surged as investors unwound bets that a win by Hillary Clinton would bring stronger regulatory scrutiny. The SPDR S&P Biotech exchange-traded fund rose the most since 2008, while Pfizer Inc. and Merck & Co. jumped at least 6 per cent. JPMorgan Chase & Co. rose 4.6 per cent to a record, and Goldman Sachs had its best one-day gain in 4 1/2 years.
The S&P 500 rose 1.1 per cent to 2,163.11 at 4 p.m. in New York, extending its advance after rising above its average prices during the past 50 and 100 days. The Dow rallied 1.4 per cent, to a two-month high.
“Our base case is we’re more likely to see a more moderate president than we saw as a candidate and the market’s agreeing with that,” said Lowell Yura, head of multi-asset solutions for BMO Global Asset Management in Chicago, which oversees US$238 billion. “We don’t see a huge impact to short-term earnings and short-term economic growth.”
A knee-jerk selloff in global stocks and a rally in haven assets reversed on wagers that Trump would increase fiscal spending to spur economic growth, and as he struck a more conciliatory tone in his first speech as president-elect.
A Trump victory had been portrayed by analysts as having the potential to unhinge markets banking on a continuation of policies that coincided with the second-longest bull market in S&P 500 history. While Republican control of both houses of Congress may enable the party to enact sweeping legislation that would be considered pro-business, concern persists over the impact from Trump’s pledges to clamp down on immigration to the US and renegotiate free-trade agreements with countries including Mexico.