Stocks Close Sharply Higher In Reaction To Trump Victory - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks moved sharply higher over the course of the trading session on Wednesday. At its best levels of the day, the Dow was above the record closing high set in August.

The major averages ended the day firmly in positive territory but off their highs of the session. The Dow shot up 256.95 points or 1.4 percent to 18,589.69, the Nasdaq jumped 57.58 points or 1.1 percent to 5,251.07 and the S&P 500 surged up 23.70 points or 1.1 percent to 2,163.26.

The strength that emerged on Wall Street came as traders reacted to Republican presidential nominee Donald Trump's surprise victory in the race for the White House.

Trump managed to pull an upset over Democratic rival Hillary Clinton after winning several key battleground states, including Florida, Pennsylvania, and Ohio.

Clinton conceded the race to Trump in a phone call early this morning and subsequently offered to work with the next president on behalf of the country in her concession speech.

Trump vowed to unite the country in his victory speech, but investors remain wary about how some of his policy proposals will play out in reality.

Many of the sectors that turned in the best performances on the day reflect industries that are expected to benefit under a Trump presidency.

Despite the strength shown by the broader markets, shares of TripAdvisor (TRIP) fell sharply after the online travel website operator reported weaker than expected third quarter revenues.

High definition camera maker GoPro (GPRO) also came under pressure after announcing the recall of the approximately 2,500 Karma drones after some units lost power during operation.

On the other hand, shares of Wendy's (WEN) moved notably higher after the restaurant operator reported better than expected third quarter earnings and raised its full-year guidance.

Sector News

Biotechnology stocks showed a substantial move to the upside on the day, driving the NYSE Arca Biotechnology Index up by 9.2 percent. The gain extended a recent advance by the index, which reached its best closing level in a month.

The strength among biotech stocks reflected relief that the companies will not have to face the price controls potentially instituted by Clinton.

Significant strength was also visible among steel stocks, as reflected by the 6.3 percent jump by the NYSE Arca Steel Index. The advanced lifted the index to its best closing level in almost two years.

Steel stocks moved higher amid optimism the industry will benefit from heightened protectionism and increased infrastructure spending under Trump.

Financial stocks also rallied due to the prospect of reduced regulations, while energy, railroad, and gold stocks also saw considerable strength.

On the other hand, utilities stocks came under pressure on the day, dragging the Dow Jones Utilities Average down by 3.7 percent. The average tumbled to its lowest closing level in almost a month.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness during trading on Wednesday. Japan's Nikkei 225 Index plummeted by 5.4 percent, while Hong Kong's Hang Seng Index slumped by 2.2 percent.

Meanwhile, the major European markets moved notably higher as the day has progressed. While the U.K.'s FTSE 100 Index jumped by 1 percent, the French CAC 40 Index and the German DAX Index surged up by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries fell sharply amid concerns about the outlook for inflation under Trump. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 21 basis points to 2.072 percent.

Looking Ahead

Trading on Thursday may continue to be impacted by reaction to the shocking election results, although traders will also be presented with a report on weekly jobless claims.

On the earnings front, Kohl's (KSS), Macy's (M), Ralph Lauren (RL), and SodaStream (SODA) are among the companies due to report their quarterly results before the start of trading on Thursday.