As U.S. Treasury yields finally stabilized leading to a mass sell-off of the dollar, increases in consumer staple stocks on Black Friday pushed the Dow Jones and S&P 500 to record peaks.
The stock market closes early today, 1pm ET so trading volumes are expected to be relatively low, but the Russell 2000 also hit a record intraday level.
There was a 0.8 percent jump for the S&P 500 as euro zone shares advanced. Black Friday traditionally ignites the U.S. holiday shopping season and the consumer discretionary sector also increased by 0.3 percent.
Crude prices were volatile as OPEC continues to discuss a potentially global production freeze, taking commodity prices down with it as European shares made four consecutive weeks of gains.
The gains in the major U.S. indexes have come following investor expectations that incoming President Donald J Trump will drop a significant number of regulations relating to financial industries like banking and insurance, but also the healthcare sector. He has also pledged to decrease taxes and bump infrastructure spending.
Since Trump’s surprise win, all three main indexes have seen stellar performance and hit record highs on multiple occasions.
“As America strides forward into their holiday season the stock market is still riding this wave of euphoria based on heightened investor sentiment,” says Anthony Russell, Senior Vice President at Monex BMO Securities. “Expectations and knee jerk investor reactions are great in the short term but we are advising clients to stay calm and wait this one out. We need to get some serious clarification on Mr Trump’s policies in the New Year, only then will we really know if this upswing is going to continue into 2017.”
At the moment, investors are most definitely betting that Trump will follow through on his pledges to keep inflation in check and to spur growth in the construction sector. Those bets are causing U.S. Treasury yields to soar and prices are being sent lower as a natural result.
Two year yields shot to a seven year peak of 1.1720 percent over the weekend as investors pondered the extent of the sell-off. After a remarkable fortnight the dollar eventually settled down.
“It’s a funny situation for investors because there are many that still want in on this action but they need to be extremely wary of the next round of sell-offs which could be 30-35 basis points,” said TD Securities chief analyst Marty Goldstein.
