November 6th Market Overview

Happy Wednesday everyone.

Today's a significant green day across all major indices. The uncertainty about the next U.S. president is over, and the markets are reacting positively to this.

When the market is this strong up till October, the market has historically been higher by year end. Here is the visual data for that.

Let's dig in...

Executive Summary

• Historic trading session sees all major indices hitting record highs with the Dow posting its largest gain since November 2022
  

• Small-cap Russell 2000 outperforms with a remarkable 5.5% gain, signaling strong confidence in domestic growth prospects
  

• Financial sector dominates with a 6% green day as investors bet on deregulation and sustained economic growth
  

• Bond market signals inflation concerns as 10-year Treasury yield spikes to 4.45%, highest since July

Market Overview

Key Market Drivers

1. Clear Electoral Outcome: Trump’s decisive victory eliminates uncertainty that had weighed on markets
   

2. Policy Expectations: Anticipated corporate tax cuts, deregulation, and business-friendly policies boost sentiment
   

3. M&A Optimism(mergers and acquisitions): Expected leadership changes at regulatory agencies spark hopes for increased deal activity
   

4. Domestic Focus: Small-cap outperformance reflects confidence in U.S.-centric growth policies

Stock Spotlight

• $GS: Surges 13.4% as Wall Street anticipates financial deregulation; shares now up 54% YTD
  

• $COIN: Posts best day since 2021 with 26% gain as Bitcoin hits record $75,000
  

• $TSLA: Up 14.9% with Musk’s backing of Trump paying dividends
  

• $JPM: Up 10% amid broader financial sector rally
  

• $WFC: Up 12% on regulatory optimism

Big Name Updates

• $UNH: Gains 5.2% leading Dow components on healthcare policy shift expectations
  

• $CAT: Up 8.6% on infrastructure spending hopes
  

• $DJT: Trump Media +32% in after-hours trading following election results

Other Notable Company News

• $SMCI (Super Micro): ▼ 24% after missing revenue guidance and auditor concerns
  

• $CVS: ▲ 7.5% despite mixed Q3 results, benefiting from sector rotation
  

• $GEO (Geo Group): ▲ 26% as private prison operators rally on policy expectations

Sector Watch

Bond Market

Treasury yields see significant movement as traders price in potential policy shifts:

• 10-year yield jumps 15 basis points to 4.45%, highest since July
  

• 30-year yield climbs to 4.61%
  

• 5-year and 10-year breakeven inflation rates reach highest levels since April
  

• Strong 30-year auction suggests underlying demand remains robust

Policy Watch

• Potential implementation of 10-20% universal tariffs on imports

• Proposed 60-100% tariffs specifically on Chinese goods

• Expected corporate tax rate reduction to 15% from current 21%

• Anticipated rollback of financial regulations and merger restrictions

• Possible changes to Fed leadership and monetary policy approach

What to Watch

1. Fed Response to Political Shift:

• Potential changes in rate cut trajectory

• Impact on inflation targeting approach

• Updates to regulatory framework

3. Sector Rotation Dynamics:

• Financial sector leadership sustainability

• Rate-sensitive sectors’ performance

• Small-cap versus large-cap momentum

4. Policy Implementation Timeline:

• Cabinet appointment announcements

• Regulatory agency leadership changes

• Initial executive order priorities

 
Thanks for reading 🙂

- John