The Dow Jones Industrial Average plunged nearly 900 points on election night but soared to an all-time high within days, the biggest stock market rebound since 2008, according to an investment analyst.
As election results trickled in on Tuesday night showing a strong showing for Donald Trump, the Dow plummeted due to uncertainty and shock.
Tom Elliott, an investment analyst at deVere Group, an independent financial advisory organization, says this is the biggest stock market rebound since 2008.
“Against most analysts’ predictions, the S&P 500 ended yesterday in positive territory,” Elliott said. “Investors focused on three planks of Trump’s economic policy that are seen as beneficial to the U.S. stock market.”
Elliott said that some of Trump’s proposed policies, such as rolling back regulations like the Dodd-Frank law, repealing Obamacare, and lowering taxes would benefit the markets.
“First, the lightening the load of regulations on certain sectors,” Elliott said. “This will help banks—repealing Dodd-Frank, perhaps—, mining and energy—repealing some of environmental laws—, abolishing [Obamacare] and the government’s pressure on pharma companies to reduce drug prices to European levels, which boosted pharma stocks.”
“Trump is seen as fiscally lax, following the record of previous Republican presidents,” he said. “He has promised to lower taxes for companies and various segments of the population.”
However, Elliott and other analysts warn of volatility and uncertainty in a Trump presidency.
“There are concerns that the financial markets are being somewhat short-sighted with yesterday’s rebound—the biggest stock market rebound since 2008,” Elliott said. “There are some potential risks that should still be taken into account.”
“Stocks initially reacted negatively to the surprise election results because the polls were wrong and due to the policy uncertainty ahead,” said Kate Warne, an investment strategist at Edward Jones. “Much of the short-term uncertainty comes from no one knowing which of the other campaign comments and proposals will be implemented.”
“How President Trump will govern is a huge wild card,” said a market commentary from Charles Schwab Corporation, a brokerage and banking company. “If he carries through on the anti-trade, pro-tariffs rhetoric he expressed during his campaign, we believe it would be detrimental to economic growth. Tax cuts, and infrastructure spending plan and reduced business regulation might offer offsetting boosts.”
“Investing under Trump may be a volatile experience, but with this comes key opportunities,” Elliott said. “As always, investors need to remain diversified globally, by sector, and by currency exposure.”
H/T: Free Beacon