‘The Claman Countdown’ panelists Brian Gardner and Art Hogan unpack the economic outlook for 2024.
The red wave that catapulted President-elect Trump to a second term created a green money wave for U.S. investors.
The Dow Jones Industrial Average and the S&P 500 notched fresh record highs Friday and closed out the best week of the year, rising 4.7% and 4.6%, respectively. The Nasdaq Composite hit its 31st record close of 2024, rising 5.7% for the week.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 43988.99 | +259.65 | +0.59% |
| SP500 | S&P 500 | 5995.54 | +22.44 | +0.38% |
| I:COMP | NASDAQ COMPOSITE INDEX | 19286.776974 | +17.32 | +0.09% |
“Contrary to popular belief, under a Republican president, you really don’t want gridlock. You don’t want a split Congress because the best returns since World War II have come under a red wave when the president and both houses of Congress were controlled by the Republicans,” CFRA Chief Investment Strategist Sam Stovall said during an appearance on “Making Money with Charles Payne.”
“In that case, the market was higher by an average of 13% per year, rising 75% of the time. So, the scenario we have right now is the best for a Republican president.”
Republicans took control of the Senate this week. As of Friday evening, Republicans are leading in races to control the House.
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Stovall also noted that small cap stocks, which generate most of their revenue/profit domestically, rise an average of 14% annually in a red wave.
Former President Trump, the Republican presidential candidate, gestures during a campaign rally at PPG Paints Arena in Pittsburgh Nov. 4, 2024. (Charly Triballeau/AFP via Getty Images / Getty Images)
Trump won both the popular and the electoral vote, defeating Vice President Kamala Harris and cementing the 45th president as the 47th come January 2025.
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“Nothing will stop me from keeping my word to you, the people. We will make America safe, strong, prosperous, powerful and free again. And I’m asking every citizen all across our land to join me in this noble and righteous endeavor,” Trump told supporters early Wednesday morning.
Dow Jones Industrial Average
During his remarks, stock futures spiked and continued rallying throughout the week. The Dow soared an unprecedented 1,500 points Wednesday, touching 44,000 later in the week for the first time.
“This is what lower regulation and lower taxes look like,” Great Hill Capital Chairman Thomas Hayes said during an appearance on “Varney & Co.” Wednesday.
Trump has promised to cut regulatory red tape for industries such as housing and energy with his “drill baby drill” mantra. As for taxes, his historic Tax Cuts and Jobs Act of 2017, set to expire at the end of 2025, will likely be extended.
He is also pushing to lower the corporate tax rate to 15% from 21% and to cut government waste with an “efficiency committee” with the help of billionaire Elon Musk.
Elon Musk, CEO of Tesla Inc., left, and former President Trump prior to a campaign event at the Butler Farm Show in Butler, Pa., Oct. 5, 2024. (Justin Merriman/Bloomberg via Getty Images / Getty Images)
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Over the past five days, within the S&P’s largest sectors, consumer discretionary stocks gained 7.7%, industrial 6% and energy over 5%. Utilities and consumer staples lagged.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| XLY | CONSUMER DISCRETIONARY SELECT SECTOR SPDR ETF | 215.16 | +3.04 | +1.43% |
| XLI | INDUSTRIAL SELECT SECTOR SPDR ETF | 142.07 | +1.45 | +1.03% |
| XLE | ENERGY SELECT SECTOR SPDR ETF | 93.75 | +0.62 | +0.67% |
| XLU | UTILITIES SELECT SECTOR SPDR ETF | 79.17 | +1.45 | +1.86% |
| XLP | CONSUMER STAPLES SELECT SECTOR SPDR ETF | 80.79 | +0.96 | +1.20% |
The Federal Reserve also did its part in juicing stocks by cutting interest rates by 25 basis points and signaling the path to lower rates likely remains intact.
“We’re on a path to a more neutral stance, and that’s very much what we’re on. That has not changed at all since September. And, you know, we’re just going to have to see where the data leads us. We have, you know, a whole six weeks of data to look at to make that decision in December,” Fed Chairman Jerome Powell said during a press conference Wednesday.
Over 64% of market participants say the Fed will likely cut interest rates again in December by 25 basis points, according to the CME’s FedWatch Tool, which predicts future rate moves. Even more are likely in 2025.