Trump Victory Sends US Stocks to Best Weekly Rally in a Year

Trader Michael Capolino wears a Trump hat as he works on the floor of the New York Stock Exchange (NYSE) ahead of the opening bell, in New York City, on Nov. 6, 2024. Timothy A. Clary/AFP/Getty Images

A post-election stock rally following President-elect Donald Trump’s decisive victory propelled two of Wall Street’s major indexes to their best weekly performance in a year. Analysts remain divided on whether the momentum will continue or give way to volatility as Trump’s policy agenda comes into clearer focus.

Wall Street’s three main indexes all closed at all-time highs on Nov. 8, with both the Dow Jones Industrial Average and the S&P 500 recording their best weekly performance since early November 2023.

At closing bell, the Dow rose 259.65 points, or 0.59 percent, to 43,988.99; the S&P 500 gained 22.44 points, or 0.38 percent, to 5,995.54; and the Nasdaq Composite gained 17.32 points, or 0.09 percent, to 19,286.78.

Investor optimism drove the S&P 500 to briefly surpass the 6,000-point mark on Nov. 8, fueled by expectations of tax cuts and deregulation under the new administration. The small-cap Russell 2000 also surged, posting an 8.51 percent weekly gain—the largest since April 2020—as domestically focused stocks stood to benefit from Trump’s plans to impose tariffs and shield domestic industries from foreign competition.

Kevin Nicholson, Global Fixed Income Chief Investment Officer at Riverfront Investment Group, said that the conditions are in place for stocks to keep climbing higher over the next year.

“Markets can continue to go higher as long as we continue to keep inflation in check and the labor market stays relatively steady,” he said. “In addition to that, the consumer is [a] really, really important part of the equation. So as long as the consumer continues to consume, companies will continue to have good earnings and so I think that the market can continue to rally for some time going forward.”

The prospect that consumer spending might hold up got a boost on Friday as consumer sentiment hit a seven-month high in early November, according to the University of Michigan’s Consumer Sentiment Index. The measure of household expectations for the future reached its most optimistic level in more than three years, with particularly strong gains among Republicans. However, long-run inflation expectations edged higher, reflecting persistent concerns about price stability.

Inflation expectations for the next year dipped slightly to 2.6 percent, the lowest since December 2020, while long-term expectations ticked up to 3.1 percent, signaling a mixed outlook as markets navigate the early days of a Trump presidency.

Also, bond markets have signaled caution despite this week’s sharp equity rally. Treasury yields fell for the second consecutive session on Friday, but the 10-year yield remained near a four-month high. Investors have tempered their expectations for Federal Reserve rate cuts in 2025 amid concern that Trump’s tariff policies could drive inflation higher.

Economist Peter Schiff cautioned that the market’s post-election rally might not last, highlighting potential economic headwinds. He warned that rising bond yields could push mortgage rates higher, exacerbating weaknesses in the U.S. economy. Mortgage rates, which track closely with the 10-year yield, continued to push higher this week, nearing 7 percent and cooling homebuyer demand.

“Stocks are soaring on hopes of a stronger economy under Trump. Bonds are tanking based on fears of larger budget deficits, higher inflation, and fewer rate cuts,” Schiff wrote in a post on X. “Stock investors are ignoring the fact that surging bond yields and mortgage rates will weaken an already weak economy.”

Some analysts cautioned that the market rally could face challenges as Trump clarifies his policy goals and announces key political appointments.

“Markets have started to digest Trump’s victory,” analysts at UBS Global Wealth Management said in a Thursday note. “As more detailed policy proposals emerge from the Trump transition team, investors should brace for further swings ahead.”