The Dow Jones Industrial Average saw its biggest five-day gain since in five years this week after a Trump victory sent banking and pharmaceutical stocks into rally mode. Investors bet big on the two sectors on prospects of reduced regulations from a Trump Administration.
The Dow rose 5.36% over the past week, its biggest gain since early December 2011. The Dow closed at a new record high on Thursday, and again on Friday. The S&P 500 increased 3.8% during the week and the Nasdaq grew 3.78%.
Investors stayed busy through the week trying to gauge the types of policies president-elect Donald Trump could enact. Trump won the Electoral College on Tuesday evening but fell short of the popular vote. Markets had priced in a victory for Democratic candidate Hillary Clinton, a result which would have carried less uncertainty over the types of policies she would implement.
Banking stocks JPMorgan Chase (JPM) , Citigroup (C) , and Wells Fargo (WFC) ended the week sharply higher, while the Financials Select Sector SPDR ETF increased nearly 11%. Pharmaceutical stocks also jumped after Democrats failed to secure the presidency and Republicans maintained control of the House and Senate. Democrats would likely have reined in rampant price gouging from pharmaceutical companies.
Emerging markets sold off on fears over the types of trade deals a Trump Administration could implement. The iShares MSCI Emerging Markets Index ETF (EEM) settled near five-month lows on Friday. The ETF has fallen more than 8% since Wednesday morning, though remains up nearly 7% for the year to date.
Crude oil posted another loss for its third week in a row as worries over a global supply glut persisted. The selloff intensified on Friday after major oil producers showed production at record highs. The Organization of Petroleum Exporting Countries, a major oil-producing bloc, reported an increase in October output to 33.64 million barrels a day. Production rose by 240,000 barrels per day from a month earlier. OPEC is scheduled to meet later this month in what traders hope could result in a production freeze agreement.
On the domestic front, the Energy Information Administration upped its forecasts for U.S. oil production for this year and the next. The EIA anticipates crude output of 8.84 million barrels a day this year, 1.3% higher than its previous estimate, while 2017 production should reach 8.73 million barrels a day, 1.7% more than its former target. A global supply glut with little signs of ceding has kept prices under pressure.
West Texas Intermediate ended the week 1.5% lower at $43.41 a barrel.
Wall Street ended the week with more than 90% of S&P 500 companies having reported earnings so far this reporting season. Retailers were a mixed bag this week with Kohl's (KSS) and Nordstrom (JWN) topping estimates, and Macy's (M) and J.C. Penney (JCP) falling short.
Disney (DIS) was also an earnings disappointment. The world's largest entertainment company reported lower advertising sales and increased costs at its ESPN sports cable unit. Disney CEO Bob Iger calmed investors' nerves in a conference call, noting that ESPN grew in 2016 and that the company expects "that growth to continue over the long term." Overall adjusted earnings of $1.10 a share fell short of expectations by 6 cents, while revenue of $13.1 billion missed by $400 million.