A rally in major world stock markets came to a halt on Thursday, November 10, as investors reassessed positions after Tuesday’s U.S. presidential election.
Investors have quickly shifted to a focus on Trump’s priorities, including tax cuts, an increase in defence and infrastructure spending, along with bank deregulation.
Stocks in Europe and the U.S. reversed course and turned negative, with utilities .SX6P down more than 4 percent in Europe. Wall Street was pulled lower by a drop in the technology sector .SPLRCT, which was on track for its biggest decline since June 24.
“In a higher rate environment, growth stock valuations aren’t what they were in a lower rate environment, that’s just plain and simple,” said Stephen Massocca, chief investment officer, Wedbush Equity Management LLC in San Francisco.
Banking shares .SPSY in the U.S. continued to rally and were up more than 2 percent on the session, and more than 9 percent over the past four sessions.
Stocks on Wall Street had rallied on Wednesday following Trump’s stunning win, with companies expected to benefit from his reflationary policies seeing the biggest climb, while bond proxy sectors like utilities .SPLRCU and real estate .SPLRCR slumped.
“I would start looking to put some money to work in some of these names, especially the ones with nine, ten percent dividend yields,” said Massocca.
The Dow Jones industrial average .DJI rose 145.15 points, or 0.78 percent, to 18,734.84, the S&P 500 .SPX lost 0.34 points, or 0.02 percent, to 2,162.92 and the Nasdaq Composite .IXIC dropped 57.32 points, or 1.09 percent, to 5,193.75.
The benchmark S&P index retreated after rising as much as 0.9 percent earlier in the session. Europe’s index of leading 300 shares .FTEU3 was down 0.3 percent after earlier touching a two-week high.
MSCI’s all-country world index .MIWD00000PUS edged up 0.05 percent after rising as much as 0.9 percent.
However, U.S. bond yields continued to climb on fears of a revival in inflation resulting from potential expansionary fiscal policy under President-elect Donald Trump.
Bond yields continued their ascent, amid the expectation interest rates will rise under increased spending. Benchmark 10-year notes US10YT=RR were last down 7/32 in price, yielding 2.087 percent, up from 2.064 percent late on Wednesday. The yields rose as high as 2.125 percent, the highest since January.
