Benchmarks closed mostly in the green on Thursday as investors scooped up shares of large banks. The U.S. banking sector soared to levels not seen since the midst of 2008 financial crisis. A possible move towards lighter regulation and increase in fiscal spending helped banks gain traction.
Pharmaceutical stocks also gained on the prospect that a Trump administration will be less restrictive on drug pricing than Clinton. However, some of the world's largest tech companies tanked as investors continue to adjust for Trump's upset victory in the presidential election. Decline in tech shares dragged the Nasdaq down.
For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) gained 218.19 points or 1.2%, to close at 18,807.88, after hitting an all-time high of 18,873.66. The S&P 500 advanced 0.2% to close at 2,167.48. The tech-laden Nasdaq Composite Index closed at 5,208.80, decreasing 0.8%. The fear-gauge CBOE Volatility Index (VIX) surged 4.7% to settle at 15.06. A total of around 12.3 billion shares were traded on Thursday, far above the last 20-session average of 7.3 billion shares. Decliners outpaced advancing stocks on the NYSE. For 53% stocks that declined, 46% advanced.
Trump's presidency is expected to boost financials because of his plan to increase fiscal spending to fund infrastructure projects. The 10-year Treasury yield has moved north on expectations that Trump will significantly boost fiscal outlays.
Trump noted in his victory speech, "We are going to fix our inner cities, and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We're going to rebuild our infrastructure, and we will put millions of our people to work as we rebuild it."
Banks, meantime, have been facing revenue pressure in a stricter regulatory landscape following the 2008 financial crisis. However, under Trump's regime, a repeal or considerable changes in the Dodd-Frank Act, which has been limiting operational flexibility and includes several provisions, might drive the bottom line of banks to some extent.(read more: 3 Reasons Why President Trump Sounds Good to Banks ).
Shares of Bank of America Corp ( BAC ), Wells Fargo & Co. ( WFC ) and J.P. Morgan Chase ( JPM ) gained 4.4%, 7.6% and 4.6%, respectively. You can seethe complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Drug Stocks Gain
While tougher action on drug pricing by Hillary Clinton had clouded the outlook for the industry this year, investors think that a Trump presidency could bring to an end the "draconian" new pricing rules on drugs in the wake of scandals over prices.
Trump's intention to repeal and replace Obamacare coupled with freeing up cash currently held overseas for tax reasons is also expected to boost the industry. Shares of Pfizer Inc. ( PFE ) and Merck & Co. ( MRK ) increased 4.3% and 1.2%, respectively (read more: 5 Top Biotech Stocks to Buy on Trump Victory ).
Tech Stocks Tank
Tech companies are currently worried about the probable changes to manufacturing and distribution that the Trump would introduce. He has already expressed his willingness for Apple Inc. ( AAPL ) to build its products in the U.S, instead of places such as China. Shares of the Cupertino-based tech giant slipped 1.9% on Thursday (read more: Why Tech Stocks Are Tanking Today ).
Stocks That Made Headlines
Shares of Nordstrom Inc. ( JWN ) increased 4.4% in the after-market trading session, after the company posted superb third-quarter fiscal 2016 results, followed by a raised fiscal 2016 earnings outlook. ( Read More )
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