Folks, the uncertainty over the presidential election is behind us... And the stock market gave Donald Trump's victory a resounding vote of confidence.
We're Past the 'National Distraction'
By Marc Chaikin, founder, Chaikin Analytics
Folks, the uncertainty over the presidential election is behind us... And the stock market gave Donald Trump's victory a resounding vote of confidence. Regular readers will know that I called the election a "national distraction." I believed it would distract investors from the incredible moneymaking opportunities in the market this year. And I warned folks about falling for the distraction and sitting on the sidelines. Well, there's no question that the market is soaring... The S&P 500 Index is making new highs again. It's up about 25% so far this year. And as we've all seen, the attitude in the market has changed dramatically since the election ended. U.S. equity funds saw nearly $33 billion of inflows last week alone. But $80 billion also flowed into U.S. money-market funds. A truly extraordinary $6.6 trillion is now sitting in U.S. money-market funds. That's a lot of potential firepower to fuel further gains in stocks...
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Meanwhile, Wall Street expects a pro-business Trump administration. The expectation is for no tax increases, unless we end up with the massive tariffs Trump has called for during his campaign. Those would in effect be tax increases. Deregulation across the board, particularly in the financial sector, is expected to show up in small-business sentiment surveys. This normally translates to more hiring and capital expenditures by smaller businesses. We saw that optimism with the small-cap Russell 2000 Index making 52-week highs last week. At the same time, an economy that runs hotter for longer will put pressure on the Federal Reserve to keep inflation under control. And last week, Fed Chair Jerome Powell took a forceful position about serving out the remaining year of his six-year term. So I expect to see a visible tug of war between the Trump administration and the Fed. I see that as a good thing for stock prices for the next 12 months. Despite the strong rally in stocks across the board (or perhaps because of the underlying expectations that fueled the rally), yields on the 10-year U.S. Treasury jumped... while bond prices dropped. The weakness in bonds came in the face of the Fed's decision on Thursday to cut its key lending rate by another 25 basis points. That adds weight to the bond market's concerns about the potential for an overheated economy in the coming years. Looking at the big picture, I'm still in the "bullish" camp. I've felt that way since January 2023. My advice to investors is to put politics aside... ignore the fearmongering headlines about tariffs and trade wars... and stay invested in stocks. In fact, I'm raising my year-end target on the S&P 500 to a range of 6,200 to 6,300. However, if some of the trillions of dollars in U.S. money-market funds starts to trickle into the stock market, we could see much higher prices in 2025. Again, I remain "bullish" on stocks... And I expect that the technology, industrial, and financial sectors that led last week's rally – along with small-cap and mid-cap stocks – will continue to lead the market higher. Good investing, Marc Chaikin
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.08%
10
16
4
S&P 500
+0.03%
150
268
77
Nasdaq
-0.12%
35
53
12
Small Caps
-0.98%
615
972
328
Bonds
-0.95%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Discretionary
+4.25%
Communication
+1.89%
Staples
+1.65%
Real Estate
+1.59%
Utilities
+1.03%
Energy
+1.02%
Information Technology
+0.85%
Industrials
+0.59%
Financial
+0.44%
Health Care
-0.82%
Materials
-2.41%
* * * *
Industry Focus
NYSE Technology Services
14
20
1
Over the past 6 months, the NYSE Technology subsector (XNTK) has outperformed the S&P 500 by +0.81%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #7 of 21 subsectors.
Top Stocks
BKNG
Booking Holdings Inc
TSLA
Tesla, Inc.
NVDA
NVIDIA Corporation
* * * *
Top Movers
Gainers
WBD
+5.42%
ALB
+5.24%
WST
+5.05%
DLTR
+4.63%
CHTR
+3.63%
Losers
MPWR
-6.62%
SMCI
-6.31%
AMTM
-5.15%
RMD
-4.76%
SWKS
-4.43%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
DIS, ARMK
GLOB
AMAT
AAP
CPRI, POST
No earnings reporting today.
Earnings Surprises
NU Nu Holdings Ltd.
Q2
$0.12
Beat by $0.01
CSCO Cisco Systems, Inc.
Q1
$0.91
Beat by $0.04
HUT Hut 8 Corp.
Q2
$-0.13
Beat by $0.25
* * * *
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