The rally in U.S. stocks faltered after the Dow Jones Industrial Average rose to an all-time high, as investors speculated gains sparked by assumptions for pro-business policies under Donald Trump went too far too quickly.
The Dow rose 74.58 points, or 0.4 percent, to 18,664.27 at 11:08 a.m. in New York, with banks and health-care shares taking the 30-stock gauge it above its Aug. 15 record. The Nasdaq 100 Index plunged 2 percent as losses among computer and software makers mushroomed. The S&P 500 Index fell 0.4 percent to 2,153.41, erasing an advance that reached 0.9 percent as technology shares sank with stocks that have high dividend payouts.
“Day two will digest what went on in day one,” said John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York. “The election is over. That was a big piece of uncertainty that hung over the market. From a business point of view, this means less regulation, and less regulation is viewed as being more growth, which should be viewed as a positive.”
Financial and health-care industries have surged since Trump’s surprise win on Tuesday, rallying on expectations that the president-elect and Republican-controlled Congress will roll back regulations. Trump’s promise to revive American infrastructure means commodities used to build everything from airports to bridges will benefit under his presidency, according to Goldman Sachs Group Inc.
“It’s a relief rally over the certainty of the outcome of the election and after the conciliatory tone that Trump took,” said Nick Skiming, a fund manager at Jersey, Channel Islands-based Ashburton Ltd. His firm oversees $10 billion. “There’s hope that a new president can introduce reforms that will enable corporate America to move forward.”
The CBOE Volatility Index jumped 11 percent on Thursday, set for its biggest two-day drop since June. The measure of market turbulence known as the VIX reached a four-month high on Friday. U.S. stocks had been heavily hedged as volatility surged leading up to the vote on speculation a Trump win had the potential to rattle markets as he had pledged to clamp down on international trade deals, while adopting divisive rhetoric throughout his campaign.