S&P 500 Peaks To An All-time High Courtesy These 5 Stocks
Zacks Investment Research | Dec 07, 2016 09:59PM ET
U.S. stocks posted their biggest rally since the U.S. presidential election, leading the S&P 500 to an all-time high. The broad-stock benchmark index’s post-election rally has been mostly underpinned by hopes that Trump will follow his market-friendly policies including boosting infrastructure outlays and trimming taxes for the wealthy. Traditional selling patterns that mostly occur at the end of the year, meantime, aren’t happening as investors bet such lower taxes under a Trump administration will propel growth.
OPEC’s decision to cut oil production for the first time since 2008 also added to the euphoria, while holiday season sales gained ground. Corporate earnings are too on the mend. The rate of U.S. economic growth has accelerated and the labor market continues to strengthen. Banking on these encouraging trends, we have focused on five top stocks that have propelled the S&P 500 higher.
S&P 500 Hits a New High
The S&P 500 closed at a record high of 2,241.35 on Dec 7, a gain of 29.12 points, or 1.3%. Almost all the sectors in the S&P 500 ended in the green, driven by expectations of pro-growth policies from Trump. In fact, the S&P 500 index has climbed 5.2% since the U.S presidential election.
Trump’s policies particularly had a positive impact on financial and industrial companies. The Financial Select Sector SPDR (XLF) and Industrial Select Sector SPDR (XLI) increased 17.5% and 10.7%, respectively, since the election. Giant investment bank Goldman Sachs (NYSE:GS) climbed 29.5% while J.P. Morgan Chase & Co (NYSE:JPM) was up about 20.3%. Industrial behemoth Caterpillar Inc. (NYSE:CAT) jumped 16.2% since the election.
Trump’s Pro-Growth Policy
While analysts have cited several reasons for the S&P 500’s solid performance, Trump’s win has been a major contributing factor. One of his priorities as a president is to spend substantially on U.S. infrastructure, a stimuli that will benefit companies that focus on the domestic economy. Trump has vowed to “fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals”. He has promised to double infrastructure spending from what his competitor Hillary Clinton had assured. This puts his proposed spending at around $550 billion, while Clinton had projected $275 billion over the next five years (read more: Zacks Investment Research
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