Wall Street keeps its foot on the gas after Trump victory. Here’s how we’ve navigated the rally

Posted By: EN Todayon: November 06, 2024In: General Energy News, Oil & Gas News

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: The post-election rally on Wall Street continued into afternoon trading, with the Dow Jones Industrial Average jumping 3.4%, or roughly 1,450 points, and the S & P 500 advancing 2.4%. The tech-heavy Nasdaq Composite added nearly 3%. All three stock gauges touched record highs during the session, as investors raced to buy companies that are perceived beneficiaries of another Donald Trump presidency. Trump, the Republican nominee who served as president from 2017 to 2021, recaptured the White House by defeating Vice President Kamala Harris in Tuesday night’s election, according to NBC News projections. Republicans also took control of the Senate, NBC News projected, while control of the House of Representatives is not yet determined. It’s worth noting, the stock market was reacting like Jim Cramer said it would in his Sunday column . He said a decisive win either way would remove the possibility of a protracted vote-counting battle that would stir up volatility. The one thing markets hate is uncertainty, and Wednesday’s rally can be attributed, in part, to relief that Wall Street professionals and individual investors alike know where they stand and what to expect from the country’s next president. Sector watch: The S & P 500 financials sector index was, by far, the leader in Wednesday’s market rally. Club names Wells Fargo and Morgan Stanley were soaring after the Trump win on top of their recent rallies. On discipline, we took some profits in each. We took some of that cash and bought more BlackRock , which was not really participating in the rally in financial stocks. Energy was in second place among the 11 sectors in the S & P 500, sending Club name Coterra Energy up more than 5%. This has been a tough one to own, but Jim said earlier Wednesday that he would like at some point buy more shares. It’s not our style to chase a rally like we’re seeing Wednesday. The industrials sector was the third-strongest sector — and with Honeywell up on the day, we sold into that strength a stock that has lagged its peers . “I think there is no room in the portfolio for companies that miss their earnings twice in a row. It is a discipline. The discipline does not allow for a large position in Honeywell any longer even as I like the reshuffling,” Jim said Wednesday afternoon. Bonds: Investors were dumping U.S. government bonds Wednesday, sending Treasury yields higher. The yield on the benchmark 10-year Treasury note rose about 15 basis points, to roughly 4.44%, as of 2;30 p.m. ET, extending its move higher since mid-September in the wake of the Federal Reserve’s jumbo interest rate cut. Bond yields move inversely to prices, and a basis point is equal to 0.01%. Our colleague Yun Li, a veteran markets reporter for CNBC.com, has a helpful explanation of the bond market action : The general thinking on Wall Street ahead of the election was that bond yields could see a big pop in the event of a Trump win, and they could surge in a Republican sweep, where the party captures control of Congress and the White House. That is because Republicans may introduce tax cuts and steep tariffs, moves that could spark economic growth, but also widen the fiscal deficit and reignite inflation . …. Neither Trump nor Harris really promised fiscal discipline on the campaign trail, raising worries that investors will demand higher yields in exchange for holding Treasurys as the government is forced to issue more and more debt to fund its ballooning spending. During Wednesday’s Morning Meeting, Jim warned about the risks of ignoring higher bond yields , given that elevated interest rates can present a problem to certain parts of the equity market such as the housing sector and related industries. “You have to be very careful to respect the bond market if you do any buying today,” Jim said. Fed day : Thursday’s session may very well belong to the bond market as investors await the Fed’s latest policy decision, which is due out at 2 p.m. ET followed by Chair Jerome Powell’s press conference a half hour later. The market is pricing in with near certainty a traditional quarter-point cut Thursday, according the CME Group’s FedWatch tool. As for the central bank’s December meeting, the probability of another quarter-point cut stands at nearly 71% versus 29% for no cut at all. On Tuesday, those odds were 77% and 22%, respectively. Up next: After the closing bell Wednesday, we’ll see earnings from Arm Holdings , Qualcomm , e.l.f. Beauty , Dutch Bros , Take-Two Interactive , and Lyft. It’s a busy morning of earnings Thursday, with results from companies including Vistra, Moderna , Barrick Gold , Halliburton , Hershey , Air Products and Chemicals , Tapestry , and Warner Bros. Discovery . And, as mentioned, the Fed’s interest rate decision is set to be announced at 2 p.m. ET. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.