The post-election market surge has extended well into December. The averages have received a significant upward jolt since the election, helped particularly by energy, transportation, industrial and financial stocks. Small cap stocks have soared as the Russell 2000 has gained nearly 20% since the end of October, with a 5.6% pop just this week. All three major averages are at record levels with the Dow and S&P 500 gaining 3% on the week and the NASDAQ, which had been lagging, participated with a gain of 3.6%.
All industry sectors joined in the run-up led once gain by bank stocks. But technology and telecoms were also strong, making up for some lost ground. Even the beleaguered healthcare stocks managed a 0.6% gain and the split between sectors gaining and losing ground since the election has narrowed. It’s often perceived as a negative for markets when lagging, lower quality stocks move higher in such rallies.
This week the Federal Reserve will meet on Wednesday and the odds are strongly in favor of a hike in short-term interest rates for the first time in a year. Comments from the after-meeting press conference may provide some insights into future moves, as well.
As seen from the charts below, the moves in the year-to-date averages are quite impressive with the Dow Industrials ahead by over 13% and the S&P 500 by 10.5%. The NASDAQ trails the group, but still a notable 8.7% gain since the end of last year. Valuations are becoming extended and the market is ripe for a short-term correction. Nonetheless, the bulls are well in charge during this Santa Claus rally as investor and consumer confidence remain high.
Here is the answer to last week’s trivia question: Bank of America can trace its roots to 1904 in San Francisco when it began operating as? The Bank of California, American Bank & Trust Co., Golden State Bank or Bank of Italy. Answer: Bank of Italy. Amadeo Giannini founded the bank that changed its name to Bank of America National Trust in 1930. Following the 1998 merger with NationsBank, the combined entity became Bank of America, now headquartered in Charlotte, NC and is the second largest bank holding company after JPMorgan Chase.
Today’s Trivia Question: What was the first all-financial cable news channel? CNBC, Bloomberg Television, Financial News Network or Fox Business News.