Markets just had their best week all year

By John Towfighi, CNN

New York (CNN) — US stocks closed at record highs on Friday, notching their best week all year after Donald Trump’s victory in the US presidential election.

The S&P 500 rose 0.38% on Friday, briefly crossing 6,000 points for the first time ever, before closing at about 5,996. The Dow rose about 260 points, or 0.59%, surpassing a record 44,000 points before closing at 43,989.

Both the S&P and the Dow had their best week in a year.

The tech-heavy Nasdaq climbed by about 0.09% Friday after topping 19,000 points on Wednesday for the first time ever. The US dollar gained slightly after a week-long rally and Treasury yields dipped.

Investors are responding to how Trump’s victory might transform the business landscape in the US.

Markets had a milestone week as investors adjusted to Trump’s victory and started to evaluate the policies touted by his campaign, such as his proposal to lower the corporate tax rate.

“There is this huge perception of a business-friendly, tax-friendly regime coming into place, especially with [Republicans] winning the Senate,” said Michael Block, chief operating officer at AgentSmyth.

The week’s historic gains were largely boosted by a massive post-election rally on Wednesday. The Dow soared 1,507 points, or 3.57%, to record a single-day gain of more than 1,000 points for the first time since November 2022.

Markets are rallying off the clarity provided by Trump’s swift victory in the presidential election. Investors piled into US stocks as Trump’s reelection gave markets a boost of clarity sooner than expected.

Markets hate volatility. When there is uncertainty, such as waiting for election results, investors can get spooked and slow down trading.

Previously, concern that Trump and his allies might contest the election results had put a cloud over investor sentiment. Initial market consensus included uncertainty over when the presidential election might be called, said Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services.

Yet after Trump’s swift victory in the electoral college, that clarity settled in, Lerner said.

“Historically, you get a pre-election dip. Normally, once there is clarity you get a bump,” Lerner said. “Clarity leads to people being more comfortable.”

Also giving markets a slight nudge upwards, the Federal Reserve cut interest rates by an expected quarter point on Thursday, contributing to investor optimism.

Traders seek out opportunities to profit, and stocks expected to perform well under a Trump administration saw record gains this week. With the election results, some investors turned toward Trump trades, or betting on stocks associated with the president-elect.

For example, Trump’s own media company, Trump Media & Technology, saw a surge in its share price after the election, which has since faded.

GEO Group (GEO), a private prison operator, saw its stock surge nearly 76% across the week, climbing to its highest point since 2018, when Trump was first in office.

Elon Musk’s Tesla rose 8.18% on Friday, gaining an overall 32.27% this week and topping $1 trillion in valuation for the first time since 2022. The world’s richest man and his America PAC went all in for Trump’s campaign, contributing to his reelection bid.

Bitcoin surged to record highs, breaking 77,000 for the first time on Friday, on anticipation that Trump has embraced cryptocurrencies as part of his economic vision.

Markets move based on investor sentiment, and the historic gains this week are not certain to last. In a report before the presidential election, JPMorgan analysts predicted that under a “red wave,” stocks stood to gain through the end of 2024, but “the uncertainty around policy execution would become more prominent in 2025.”

“This was a market coiled for an extreme reaction one way or the other,” said Art Hogan, chief market strategist at B Riley Wealth Management. “The market is saying: We just elected a business-friendly president. … The initial reaction to a Trump administration is met with enthusiasm that may be temporary.”

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