Dow Jones Industrial Average (DJIA) Shoots Up as Donald Trump Soothes Nerves
The shocking defeat of Hillary Clinton yesterday sent the global markets in a frenzy. However, as the dust settled, investors realized that Donald Trump as president may actually be good news for stocks. This is due to his policies that favor lower corporate taxes and higher infrastructure spending.
The sentiment was turned around in major part after he made his victory speech, which was in stark contrast to his campaign rhetoric. He urged everyone to come together to make America great again. He also focused on how building infrastructure will lead to economic growth.
After initial losses, the DJIA staged an impressive comeback, posting gains of 1.4%, or 257 points, and closing at 18,589.69.
Nasdaq rose over one percent, or about 57 points, to close at 5,251.07.
The S&P 500 gained 1.1% and closed at 2,163.26.
The plans to invest big in infrastructure pushed up industrial and infrastructure stocks. Caterpillar Inc. (NYSE:CAT), which makes construction equipment, gained almost eight percent. Others like Astec Industries, Inc. (NASDAQ:ASTE) gained more than 16% and Gencor Industries, Inc. (DE) (NASDAQ:GENC) surged about 11%.
United Rentals, Inc. (NYSE:URI) gained 17% on the hopes that tractor rentals will go up as infrastructure plans take shape.
Materials companies were also big gainers with United States Steel Corporation (NYSE:X) surging 17% to close at $24.56.
Coal producers cheered on Trump’s win, as he had already made clear his plans to revive the coal industry. Cloud Peak Energy Inc. (NYSE:CLD) gained about 13%, CONSOL Energy Inc. (NYSE:CNX) jumped nine percent, and Peabody Energy Corporation (OTCMKTS:BTUUQ) posted 50% gains.
Defense stocks also were buoyant. Raytheon Company (NYSE:RTN) gained more than seven percent to close at $146.71 and Lockheed Martin Corporation (NYSE:LMT) gained six percent and closed at $253.46.
Pharmaceutical stocks gained on the declining fears of price regulation. Pfizer Inc. (NYSE:PFE) posted gains of seven percent and closed at $32.12. Merck & Co., Inc. (NYSE:MRK) and Eli Lilly and Co (NYSE:LLY) gained about six percent. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) soared 14% to close at $418.42.
As many retailers and companies like Walt Disney Co (NYSE:DIS) and AstraZeneca plc (ADR) (NYSE:AZN) are set to report their quarterly results today, there would be lots of stock specific action. The DJIA may witness another roller coaster ride as the details of Trump’s cabinet formation and policies keep trickling in. Attention would also be on his stance towards the Fed and Janet Yellen.