U.S. stocks rose sharply on Wednesday in a dramatic turnaround from deep overnight losses as Wall Street embraced the upset presidential election victory of Republican Donald Trump.
After warning for months that a Trump White House would create uncertainty and damage sentiment, investors poured money into sectors that may benefit from the former reality TV show star’s victory.
That was a steep reversal from the previous night, when financial markets reacted violently as Democrat Hillary Clinton’s path to victory disintegrated and S&P futures dropped 5 percent before a trading limit kicked in.
“The stock market is acting like a teenager. It makes a lot of demands but it doesn’t know what it wants,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
Gains of over 3 percent each in the heavily weighted healthcare and financial sectors pushed the Dow Jones industrial average up over 1 percent. The Dow was just shy of its record high.
The real estate sector fell 2.28 percent and utilities lost 3.68 percent. Both sectors are proxies for bonds, which also fell.
“Anything that Trump mentioned during the campaign, any industry he has mentioned, favorably or unfavorably, is moving today big-time,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
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A curb on drug pricing was a key campaign theme for Clinton, while Trump has called for repealing the Affordable Care Act and loosening restrictions on banks enacted after the financial crisis.
The Dow Jones industrial average jumped 1.4 percent to end at 18,589.69, just 0.25 percent below its all-time high set in August. The S&P 500 surged 1.11 percent to 2,163.26 and the Nasdaq Composite added 1.11 percent to end at 5,251.07.
Trading volume was the highest since June, when Britain voted to abandon the European Union.
DoubleLine Capital Chief Executive Jeffrey Gundlach, known as the ‘Bond King,’ said stocks rebounded strongly from overnight losses because investors believe Trump’s policies are better for economic growth in the short-term than Clinton’s.