Wall Street remains on the accelerator after Trump's victory. This is how we mastered the rally

November 6, 2024 | angela

Every weekday, CNBC Investing Club with Jim Cramer publishes Homestretch – an actionable afternoon update just in time for the final hour of trading on Wall Street. Markets: Wall Street's post-election rally continued into afternoon trading, with the Dow Jones Industrial Average gaining 3.4%, or around 1,450 points, and the S&P 500 gaining 2.4%. The tech-heavy Nasdaq Composite gained nearly 3%. All three stock indicators hit record highs during the session as investors rushed to buy companies seen as beneficiaries of another Donald Trump presidency. Trump, the Republican nominee who served as president from 2017 to 2021, reclaimed the White House by defeating Vice President Kamala Harris in Tuesday night's election, according to NBC News forecasts. According to NBC News, Republicans also took control of the Senate, while control of the House of Representatives has not yet been determined. It's worth noting that the stock market reacted as Jim Cramer said it would in his Sunday column. He said a decisive victory, either way, would eliminate the possibility of a protracted battle over vote counting that would increase volatility. The one thing markets hate is uncertainty, and Wednesday's rally can be attributed in part to relief that both Wall Street professionals and retail investors know where they stand and what to expect from the country's next president . Sector Watch: The S&P 500 financial sector index was by far the top performer in Wednesday's market rally. Club names Wells Fargo and Morgan Stanley soared following the Trump victory on top of their recent rallies. For discipline reasons, we each took some profits. We took some of that money and bought more BlackRock, which didn't really participate in the rally in financials. Energy ranked second among the 11 sectors in the S&P 500, giving club name Coterra Energy a rise of more than 5%. This was a difficult proposition, but Jim said earlier Wednesday that he would like to buy more shares at some point. It's not our style to chase a rally like the one we experienced on Wednesday. Industrials was the third strongest sector – and with Honeywell up on the day, we sold a stock that underperformed its peers on that strength. “I think there is no place in the portfolio for companies that miss earnings twice in a row. It's a discipline. “Discipline no longer allows for a large position in Honeywell, even though I like the restructuring,” Jim said Wednesday afternoon. Bonds: Investors sold U.S. Treasury bonds on Wednesday, sending Treasury yields higher. The yield on the benchmark 10-year Treasury note rose about 15 basis points to about 4.44% as of 2:30 p.m. ET, continuing its rise since mid-September in the wake of the Federal Reserve's massive rate cut. Bond yields move inversely to prices, and one basis point is equal to 0.01%. Our colleague Yun Li, a veteran market reporter for CNBC.com, has a helpful explanation for the bond market trend: The general consensus on Wall Street before the election was that bond yields could rise sharply in the event of a Trump victory, and they could rise in a Republican victory streak that sees the party take control of Congress and the White House. That's because Republicans may introduce tax cuts and high tariffs, measures that could boost economic growth but also widen the budget deficit and reignite inflation. …. Neither Trump nor Harris made any real promises of fiscal discipline during the campaign, fueling fears that investors will demand higher yields in return for holding Treasury bonds as the government is forced to issue more and more debt to cover its skyrocketing spending to finance. During Wednesday's morning session, Jim warned of the risks of ignoring higher bond yields, as elevated interest rates can be a problem for certain parts of the stock market, such as real estate and related industries. “You have to be very careful and respect the bond market when you buy something today,” Jim said. Fed Day: Thursday's session could very well belong to the bond market as investors await the Fed's latest monetary policy decision, which will be announced at 2 p.m. ET, followed by Chairman Jerome Powell's press conference a half-hour later . The market is almost certainly pricing in a traditional quarter-point cut on Thursday, according to CME Group's FedWatch tool. As for the December central bank meeting, the probability of another quarter-point rate cut is almost 71% versus 29% if there is no rate cut at all. As of Tuesday, those rates were 77% and 22%, respectively. Next up: After the closing bell on Wednesday, we'll see earnings from Arm Holdings, Qualcomm, elf Beauty, Dutch Bros, Take-Two Interactive and Lyft. It's a busy Thursday morning with results from companies like Vistra, Moderna, Barrick Gold, Halliburton, Hershey, Air Products and Chemicals, Tapestry and Warner Bros. Discovery. And as mentioned, the Fed's interest rate decision is expected to be announced at 2:00 p.m. ET. (A complete list of Jim Cramer's Charitable Trust stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation's portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.

Every weekday, CNBC Investing Club with Jim Cramer publishes Homestretch – an actionable afternoon update just in time for the final hour of trading on Wall Street.

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