U.S. equities moved higher on Tuesday thanks large part to what’s widely seen as a narrow victory by “status quo” Democratic presidential challenger Hillary Clinton over “anti-establishment” GOP rival Donald Trump.
As an example of the thinking that’s permeating Wall Street these days, Trump called out Federal Reserve Board Chair Janet Yellen as being politically motivated, holding interest rates too low and fueling a bubble in the stock market. Since Trump would ostensibly be against all that — and thus, bad for the cheap money rise in stocks — his weaker-than-expected performance boosted share prices.
In the end, the Dow Jones Industrial Average gained 0.7%, the S&P 500 Index gained 0.6%, the Nasdaq Composite gained 0.9% and the Russell 2000 gained 0.4%. Treasury bonds were mostly stronger, the dollar was mixed (as the Mexican peso gained, again on Trump’s performance), gold lost 1% and crude oil lost 2.7% on diminishing hopes of an OPEC production freeze agreement out of Algiers.
Saudi Arabia’s oil minister reportedly told the press that he is not expecting a deal, although the positional gaps in views among OPEC countries is narrowing and a consensus may be possible by the next “official” meeting in November.
Also weighing on prices were comments by the IEA’s executive director that global oil output will exceed demand through late 2017 — in contrast to the group’s Sept. 13 statement that oil supply would outpace demand “at least through the first half of next year.”
Technology stocks led the way with a 1.2% gain. Defensive utilities and energy stocks were the laggards, down 1.3% and 0.5% respectively. Consumer discretionary stocks were also strong, with RV maker Thor Industries, Inc. (NYSE:THO) up 3.5% on a top- and bottom-line beat on strength in its towables segment.
Something to watch going forward is the ongoing pressure on global bank stocks including Deutsche Bank AG (USA) (NYSE:DB). Although shares recovered somewhat today, growing regulatory and operational hurdles amid weak balance sheets and ongoing economic tepidness is a recipe for trouble. DB shares gained 0.6%, coming off of the record lows set on Monday.