Stock Market Update

[BRIEFING.COM] The election is over (most of it anyway) and the market has responded in kind to the idea that Donald Trump's victory, and polling activity that points to a likely GOP sweep of Congress, will offer the president-elect a mandate that will make it easier to enact pro-growth policies that revolve around lower tax rates and deregulation.

This view to the near future has energized the stock market, which is enjoying a relief rally of epic election proportions. The Dow Jones Industrial Average, Nasdaq Composite, S&P 500, and S&P 400 have all run to record highs on the back of spirited buying interest and influential leadership. The Russell 2000, still shy of an all-time high, is up 5.2%.

The financial sector (+5.9%) has been the biggest winner in today's action, led by huge gains in the investment bank, regional bank, and consumer finance stocks. Outsized moves by Goldman Sachs (GS 592.67, +65.71, +12.5%), KeyCorp (KEY 19.61, +2.35, +13.7%), and Discover Financial Services (DFS 179.87, +28.02, +18.5%) are representative of the excitement that a new administration will promote less regulation, more M&A activity, and better growth dynamics.

Other standouts include the industrials (+3.7%), energy (+3.5%), consumer discretionary (+3.1%), led by a 14.2% gain in Tesla (TSLA), and information technology (+2.3%) sectors.

While the stock market has rallied, the Treasury market has languished. Yields are up across the curve on the pro-growth trade cutting across capital markets. The U.S. Dollar Index has soared 1.6% to 105.05. Yields are also up, however, on concerns about inflation heating up again on account of the expected growth and president-elect Trump's advertised tariff plans. Festering worries that the budget deficit and national debt will continue to increase are also part of the trading mix.

The 2-yr note yield is up six basis points to 4.27% and the 10-yr note yield is up 15 basis points to 4.44%. Their highs of the session are 4.29% and 4.48%, respectively.

The jump in rates has undercut the real estate (-3.5%) and utilities (-1.0%) sectors, which aren't fans of the higher financing costs or the competition higher rates pose for income-oriented equity plays.

Today's economic data was limited to the MBA's Mortgage Applications Index, which declined 10.8% week-over-week with refinance applications down 19% and purchase applications down 5%.