It was perhaps the most surprising trade in a record-setting week on Wall Street: How quickly investors swapped presidential pre-election jitters for enthusiasm at Donald Trump's victory over Hillary Clinton.
That enthusiasm ultimately propelled the Dow Jones industrial average to consecutive all-time highs this week and gave the Standard & Poor's 500 index its biggest weekly gain in two years. The rally lost some steam Friday, pulling the S&P 500 slightly lower.
The Dow rose 39.78 points, or 0.2 percent, to 18,847.66. The S&P 500 index fell 3.03 points, or 0.1 percent, to 2,164.45. The Nasdaq composite index gained 28.32 points, or 0.5 percent, to 5,237.11.
For months, investors viewed Trump and his proposed agenda as a more risky bet for the economy and the markets than his rival, who had been widely perceived as the candidate most likely to keep the status quo in place.
But then the billionaire won. And, more importantly, Republicans retained majorities in the House and Senate, ensuring that the president-elect's party will be in control when he takes office Jan. 20.
"I don't think people planned on a straight Republican sweep," said J.J. Kinahan, TD Ameritrade's chief strategist. "All of a sudden you realize some of the things that the markets have been wishing for have a chance to be done. That's why we've rallied so much. This scenario was such a low probability, nobody was planning for it."
Investors are now betting that Trump and a Republican-controlled Congress will have a clear pathway to boost infrastructure spending, cut taxes and relax regulations that affect energy, finance and other businesses.
Health care stocks are perhaps the best example of how the mindset of investors has changed in just a few days.
The sector had been one of the worst performers this year in anticipation that Clinton, who had mostly maintained a lead in the polls, would push to expand the government's role in health care and curb price increases by drugmakers. That began to turn around this week, as investors bid up shares in pharmaceutical companies.
The anticipation of higher interest rates fueled the sell-off in bonds this week that sent bond prices lower and drove up the yield on the 10-year Treasury note to the highest level since January. On Monday it was 1.83 percent. It hit 2.14 percent as of late Thursday. Bond trading was closed Friday in observance of Veterans Day.
That yield is a benchmark used to set interest rates on many kinds of loans including home mortgages.
The move away from bonds, utilities and other safe-play assets is likely to continue as long as investors believe that Trump's economic policies will lead to growth in the economy and usher in higher interest rates.
In energy futures trading Friday, benchmark U.S. crude fell $1.25, or 2.8 percent, to close at $43.41 a barrel in New York. Brent crude, used to price international oils, slid $1.09, or 2.4 percent, to close at $44.75 a barrel in London.
Other energy futures also closed lower. Wholesale gasoline lost 3 cents to $1.31 a gallon. Heating oil fell 4 cents to $1.40 a gallon. Natural gas lost a penny to $2.62 per 1,000 cubic feet.
Among metals, the price of gold tumbled $42.10, or 3.3 percent, to $1,224.30 an ounce, while silver slid $1.36, or 7.2 percent, to $17.38 an ounce. Copper fell 4 cents, or 1.6 percent, to $2.51 a pound.
In currency trading, the dollar fell to 106.78 yen from 106.83 yen late Thursday. The euro slid to $1.0845 from $1.0890. The Mexican peso continued to drop, as investors worried about Trump's promises to scrap trade deals and build a wall along the border. One dollar bought 20.94 pesos on Friday, more than the 19.61 pesos it bought late Thursday.
Business on 11/12/2016