A little more than 24 hours ago, stock market futures were signaling one of the worst potential opening drops in history. Both the S&P 500 and Nasdaq indexes hit their circuit breakers of -5%, while the Dow Jones was down more than 800 points in after-hours trading.
And then, for reasons that will probably never be fully understood, stocks rallied.
And rallied some more.
Stocks rallied throughout the early morning hours, and actually opened up yesterday, which was an inconceivable of an open as it was unlikely that Donald Trump would actually win the election. None of the experts thought Trump had a chance, and absolutely no one believed that stocks would rally yesterday after his victory.
But yet the Dow Jones Industrial Average continued to rally throughout yesterday’s trading session, closing up nearly 257 points to 18,589.69.
And futures this morning point to another positive open, with early Dow indicators up well over 100 points. If those gains hold into today’s close, it would be a record closing price for the Dow — again, something almost no one thought would be possible, given a Trump victory.
Can it be that investors who believed just a few days ago that Trump would be toxic to the markets, now believe he’s incredibly bullish for equities? Somehow, yes, that’s exactly what appears to be happening.
Connor Campbell, financial analyst at Spreadex, said in a note to clients: “Just as Trump’s victory is akin to a super-sized Brexit, the markets seem to have worked through the kind of fluctuations they saw following June’s referendum in record time, compressing the sharp fall to all-time high-nearing rebound into around 24 hours.”
“Investors who were previously so against the former reality TV star, appear to have had an abrupt change of heart in the short term,” he said.
Here in the U.S., they say that everyone likes a winner.
It’s probably safe to say investors are taking that saying to heart right now.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $1.30 (+0.70%) to $187.26 per share in premarket trading Thursday. Year-to-date, the only ETF that tracks the DJIA has gained 6.88%.