What was really behind Wednesday's monster rally? Trump quickly making peace — SkimNews
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- Trump told The New York Times and The Wall Street Journal overnight Tuesday that he accepted the Democrats’ victory and would work with them; the headlines coincided with a rebound in stock-market futures.
- The S&P 500 gained more than 1% on Wednesday, with its close implying about a 4% gain to 8,000 by year-end; Osaic’s Philip Blancato said 8,000 was “not totally out of the question,” but “a lot” was predicated on Trump.
- CNBC’s Fed Survey found that, among 30 fund managers, strategists and economists, 63% believed uncertainty over the balance of power created by legal challenges to election results posed “some” market risk, up from 61% in September; 14% called it “significant,” up from 7%.
- Thomas Hempell of Generali Investments said Trump’s acknowledgment of the Democrats’ victory and openness to collaboration helped markets rally on hopes that a contested result and more adverse polarization would be avoided.
- George Saravelos of Deutsche Bank said Trump’s acceptance should “act as a break on extreme policy outcomes and bring down risk premia,” so long as the president’s decision remains.
- Jay Woods of Freedom Capital Markets said part of the rebound came from Trump’s “initial tone and reaction,” called him an “X factor,” and identified inflationary pressure from higher energy prices tied to the Middle East conflict as a remaining headwind.
Why it matters: Election uncertainty was a measurable source of market risk: among 30 fund managers, strategists and economists, 63% called it “some” risk and 14% significant. The S&P 500 rose more than 1% as Trump’s acceptance was credited with lowering risk premia, though investors said his position must hold for that relief to last.
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