US stocks rallied on Wednesday, in a dramatic rebound from overnight losses fuelled by the stunning victory of Republican Donald Trump as investors snapped up stocks in sectors that appeared poised to benefit from the policies of a Trump presidency. Markets oscillated between gains and losses in choppy morning trade. At midday, each of the three major stock indexes were up and near session highs in the wake of Trump's win.
Gains of 3 percent each in the heavily weighted healthcare and financials sectors pushed indexes higher. Bond proxy sectors such as real estate, down 2.2 percent, and utilities, off nearly 3 percent, were the worst performers. "At this point it is almost a Rorschach picture. If you want to be positive you can say at face value his policies are deflationary and less regulation," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in New York.
"The sectors that benefit from that would be in terms of reflation, it is going to be financials, and less regulation it is going to be healthcare and financials." Reflation policies are intended to increase economic output by lowering taxes and boosting spending. A curb on drug pricing was a key campaign theme for Democratic nominee Hillary Clinton, while Trump has called for repealing the Affordable Care Act and loosening restrictions on banks enacted after the financial crisis.
The Dow Jones industrial average rose 159.5 points, or 0.87 percent, to 18,492.24, the S&P 500 gained 16.55 points, or 0.77 percent, to 2,156.11, and the Nasdaq Composite added 33.81 points, or 0.65 percent, to 5,227.30. CBOE Volatility index futures shot nearly 40 percent higher at one point, reflecting investors' reservations about a Trump presidency, but sharply retraced the advance after Trump's acceptance speech. During the session the CBOE Volatility index was down 16.7 percent, on track for its biggest daily drop since late June.
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