The Day After…2016 Redux
US equity markets are up big today after President Trump’s victory in last night’s election. The average stock in the Russell 1,000 is currently up 2.17%, while the Financials sector ETF (XLF) is up more than 5% on the day.
While many market prognosticators went into the 2016 election saying that a Trump victory would be terrible for the stock market, the same upside reaction that we’re seeing today occurred on the day after Trump’s victory in 2016. (And as a reminder, Dow futures fell 1,000+ points immediately following Trump’s victory back in 2016 before eventually flipping sharply higher.)
The underlying action in the stock market today looks remarkably similar to the action we saw on this same day in 2016.
Below is a look at the average performance of stocks in the Russell 1,000 today broken out by sector versus how they performed on the day after the 2016 election.
The three sectors that are selling off today are the same three that sold off following Trump’s win in 2016: Real Estate, Utilities, and Consumer Staples.
On the flip side, the three sectors performing the best today are the same three that performed the best in 2016: Industrials, Energy, and Financials.
Notably, the three best and worst performing sectors today were also the three best and worst performing sectors on the day after Trump won in 2016.
In the middle of the pack, we’re seeing Technology and Communication Services outperform their 2016 action today, although Communication Services didn’t have some of the big social media companies in it eight years ago. And Health Care and Materials — while still up — aren’t performing as well today as they did back in 2016.
While it may be tempting to pile into the three sectors performing the best today because of Trump’s victory, the three sectors that performed the best on the day after Election Day 2016 ended up being some of the worst-performing sectors during Trump’s first four-year stint in office.
As mentioned above Financials, Energy, and Industrials were the three best-performing sectors on the day after the election in 2016, and they’re also the three best-performing sectors today. As shown below, though, Energy (XLE) would go on to fall 49% from the day after the 2016 election through the day before the 2020 election, while Financials (XLF) was the second worst sector ETF during that time frame and Industrials (XLI) was on the lower end of the performance pack. On the flip side, it ended up being Technology (XLK) and Consumer Discretionary (XLY) that performed the best between the 2016 and 2020 elections even though they weren’t big standouts on the day after the 2016 election.
As far as the action goes today, Financials are soaring. Below is a look at the 20 best-performing stocks in the Russell 1,000 so far today. 14 of the 20 are from the Financials sector, and all of them are up more than 12%. Outside of the Financials, Tesla (TSLA) is also on the list with a gain of more than 13%. Given Elon Musk’s very vocal support of President Trump this election cycle, the action in TSLA should come as no surprise.
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Chart of the Day: Surging Superlatives
Bespoke’s Morning Lineup – 11/6/24 – That Was Fast!
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“I think we just witnessed the greatest political comeback in the history of the United States of America.” – JD Vance
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We’ve been saying for quite some time now that half of the country would be waking up disappointed this morning and based on the results of the election so far, it appears to be slightly less than half of the country. Former President Donald Trump has been projected as the winner of the 2024 Presidential election, and he is also modestly ahead in the popular vote as well. Like it or not, when you look back at the last few years, objectively speaking, it’s hard not to agree with VP-elect JD Vance that this has to rank right up there as one of the biggest political comebacks in US history.
For the last several months now, we’ve been documenting the correlation between market performance and President Trump’s numbers in national polls and betting markets. It comes as no surprise, therefore, that equity markets are sharply higher given the fact that we have results this morning and they went in the Republican party’s direction. The S&P 500 shot higher overnight, and the S&P 500 tracking ETF is on pace to gap up over 2% which would be the largest upside gap since December 2022.
The move in small caps has been even more notable. Take a look at the chart below. The iShares Russell 2000 ETF (IWM) is trading up over 5% this morning, which would be the largest upside opening gap since “Pfizer Monday” on 11/9/2020 when the company announced the results of its vaccine trials. Today would be just the sixth time in the history of the iShares Russell 2000 ETF (IWM).
As equities rally this morning, bonds have tanked as yields surge. The yield on the 10-year has surged to 4.45%, which is the highest since early July. With that move, the iShares 20+ Year Treasury ETF (TLT) is poised to gap down 3.35%. That would rank as the largest downside gap in the history of the ETF and is one of just four times that it gapped down 2.5% or more. The others were 9/19/08 (-3.29%), 3/24/20 (-2.86%), and 5/10/10 (-2.53%).
The Closer – Election Day, Sentiment, LMI- 11/5/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a dive into election day performance (page 1) followed by a rundown of the latest economic data including service PMIs (page 2) and the Logistics Mangers’ Index (page 3). We then review the latest investor sentiment data (page 4) before closing out with a 10-year note auction recap (page 5).
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Bespoke’s Consumer Pulse Report — November 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.
Bespoke’s Consumer Pulse Report — November 2024
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more. The report also has numerous proprietary US economic data points that are extremely timely and useful for investors.
We’ve just released our most recent monthly report to Pulse subscribers, and it’s definitely worth the read if you’re curious about the health of the consumer in the current market environment. Start a 30-day free trial for a full breakdown of all of our proprietary Pulse economic indicators.