Editors' pick: Originally published Nov. 14.
Why is the market up following a surprising result in the U.S. presidential election?
We can thank a series of speeches signaling an orderly transition of power for the stock market's improved tone. Following the surprise election of Donald Trump, stock futures traded down 5% near midnight last Tuesday, the limit they are allowed to fall overnight before trading is temporarily halted.
Heading into the election, the polls and prediction markets pointed to a Clinton victory, and many investors had been prepared for such an outcome.
The losses incurred, when trading halted, turned out to be the low.
At about 3 a.m. EST Wednesday, Donald Trump gave a victory speech that emphasized working together to unify the country, a country he said had "tremendous potential."
President Obama said he would work to ensure a smooth transition to a Trump Administration, despite their differences, and that everyone would be "rooting for his success."
House Speaker Paul Ryan said he admired Trump's political accomplishment and said Trump had earned a mandate by reaching new voters. Ryan said he was certain Congress would work together with the new president.
Democratic candidate Hillary Clinton urged unity in her concession speech. She emphasized her respect for the peaceful transition of power. Accepting the outcome, she said President-elect Trump deserved an open mind and chance to lead.
This was an especially painful loss for Clinton, who said she hoped that someone else will accomplish her long-time dream of becoming the first women to hold the keys to the White House before too long.
The stock market finished the day up 1.1%.
How long the rally underway lasts is anyone's guess. Heading into the Nov. 8 election, the U.S. stock market staged a nine-day losing streak for the first time in 36 years. On any given day, the stock market can rally or decline for any reason or no reason at all.
The first 100 days in office has been an important milestone for incoming presidents ever since Franklin Delano Roosevelt made it so in 1933. There were many pledges made during Trump's campaign. Once the dust clears, Trump's economic agenda next year is likely to center on infrastructure, including energy infrastructure, as well as defense spending, reducing corporate and income taxes. Other priorities include immigration and energy extraction.
The initial impact of the election should have a transitory impact on the market. Ultimately, the focus should shift to the fundamentals of a growing economy, a slow Federal Reserve tightening cycle, and inflation that is off its lows but not a clear and present danger.