Election Week Revisited, by the Numbers
by: Smith and Howard Wealth Management
Much has been made of the precipitous fall and amazing recovery in the US equity futures markets during the wee hours of election night and the gains that followed on the days following the election. But what has not been widely discussed is that the fall was actually sandwiched between strong gains (2.7%) early in the week – the two days before the election after FBI Director James Comey once again exonerated candidate Hillary Clinton (presumably clearing her path to the presidency) and the two days after Donald Trump’s surprising victory.
So markets rallied in anticipation of the presumed Clinton victory, but then curiously added further to the gains (albeit after a brief detour in the early hours Wednesday morning) on a stunning Trump win (see chart below). The conclusion of the election was sure to remove at least some market uncertainty and calm investor fears, but the surprising nature of the results and following market reactions also took investors by surprise.
While US equity markets were generally strong throughout the week, post-election winners and losers did emerge that appeared to be driven by President-elect Trump’s ambitious agenda of tax cuts, fewer regulations, increased defense and infrastructure spending and health care reform (along with the possibility that a Republican-controlled Congress can help some of these proposals become reality). Just how successful he’ll be remains to be seen, but that has not slowed investors from acting on their anticipation. At this point, most appear to be betting on his ability to succeed. Without further ado, let’s get to some of the numbers.
As we all know, campaign speeches and rhetoric are not policy and it will be some time before we know what will actually play out and when. It’s safe to say that President-elect Trump, like every President before him, will not accomplish everything in his stated agenda and a significant amount of time will pass before any implementation. That’s never stopped investors from placing their bets early, though, and this time is certainly no different.
Our approach continues to be one centered on discipline, diversification, and the long term. Portfolios are designed with the goal of reducing volatility and providing opportunities to take advantage of market fluctuations.
If you have any questions about this content or would like to discuss your wealth management needs with us, please contact anyone on our team at 404-874-6244 or email me here.
For perspective on the tax implications of President-elect Trump’s proposed agenda, read this piece from our friends at Smith & Howard.
Subscribe to our newsletter to get inside access to timely news, trends and insights from Smith and Howard Wealth Management.