US banking sector shares surged to levels not seen since the midst of the 2008 financial crisis, pushing the Dow to an all-time high, while technology shares sank as Wall Street rearranged its bets to benefit from Donald Trump’s presidency.
The S&P 500 financial sector on Thursday surged 3.70 percent to its highest since the 2008 financial crisis, bringing its gain since Trump’s surprise victory in Tuesday’s election to 7.9 percent, its biggest two-day gain since 2011, Reuters reports.
Shares of Wells Fargo & Co. jumped 7.58 percent to their highest since January, and have now erased all of the losses incurred in the wake of a scandal over fake accounts opened by its employees.
Bank of America surged 4.40 percent and JPMorgan Chase rallied 4.64 percent to a record high.
Trump has sided with leading conservatives in calling for the repeal of the 2010 Dodd-Frank Financial Reform Act largely opposed by banks.
“The Trump campaign did say it would repeal Dodd-Frank. Rates are higher and the yield curve is steeper. Those are all good things for the banks,” said Warren West, principal at Greentree Brokerage Services in Philadelphia.
Apple dropped 2.79 percent while Amazon.com fell 3.82 percent. The S&P 500 technology index was down 1.59 percent.
The Dow Jones industrial average jumped 1.17 percent to end at 18,807.88, smashing through its previous record high set in August by almost 1 percent.
The S&P 500 rose 0.2 percent to 2,167.48 while the Nasdaq Composite dropped 0.81 percent to 5,208.80, hurt by losses in tech shares.
With Thursday’s gain, the Dow is up 8 percent in 2016 and the S&P 500 is up 6 percent.
The market got a lift after St. Louis Federal Reserve President James Bullard said the Republican sweep of the White House and Congress could break the current gridlock over national policy in a potential boon to the US economy.
Industrials trailed the financials with a 2.05 percent advance.
Meanwhile, the US dollar rose more than 1 percent to 106.94 yen for the first time since late July.
The greennback also rose 0.3 percent against a basket of major world currencies, touching its highest in more than two weeks to hover just below levels last seen in early February.
“It’s a continuation of the post-election response,” said Ian Gordon, FX strategist at Bank of America Merrill Lynch.
“For us, the clean sweep of both the White House and the Congress by the Republicans is a clear signal that we are going to get a pretty significant fiscal stimulus in 2017 and that is going to be bullish for [interest] rates.”
Expectations that Trump’s policies would boost spending and inflation helped US long-dated Treasury yields rise to their highest in more than 10 months.
Yields on benchmark 10-year notes and 30-year bonds had their largest one-day rise in years on Wednesday and added to gains on Thursday after a weak 30-year bond auction.
Higher interest rates for U.S. Treasuries raise the value of the dollar by making dollar-denominated assets more attractive to investors.
The Chinese yuan weakened past 6.80 per dollar in the offshore market on Thursday for the first time in more than six years on fears that Trump will act on the protectionist rhetoric that ran through his campaign, particularly regarding trade with China.
The euro fell to US$1.0865, its lowest against the greenback since Oct. 25.
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