Trump Rallies Stock Market To All Time Highs

• Stocks have rallied since the U.S. presidential election, with major indexes advancing two weeks in a row through Friday.
• “The market's been ripping since the election,” said Bill Costello, portfolio manager at Westwood Holdings Group.

The S&P 500, Dow Jones Industrial Average and Nasdaq Composite climbed toward a trifecta of closing records Monday as commodity prices gained.

Stocks have rallied since the U.S. presidential election, with major indexes advancing two weeks in a row through Friday. Investors have piled into banks, health-care stocks and industrials on bets that President-elect Donald Trump would loosen regulation and boost infrastructure spending. At the same time, they've pulled back from Treasurys and stock-market bond proxies, which are less attractive to investors when interest rates rise.

Financials led much of the charge, accounting for 73% of the S&P 500's postelection gains through Friday, according to S&P Dow Jones Indices. Five stocks — Wells Fargo, Bank of America, J.P. Morgan Chase, Berkshire Hathaway and Citigroup — accounted for more than a third of the broad index's gains through that time period.

On Monday, stocks rose broadly, with all 11 S&P 500 sectors on track to end with gains.

“The market's been ripping since the election,” said Bill Costello, portfolio manager at Westwood Holdings Group. Hopes that the Trump administration would usher in a pro-business, pro-growth environment are driving stocks higher yet, Mr. Costello added.

The Dow Industrials rose 74 points, or 0.4%, to 18941, above its Nov. 15 closing record of 18923.06. The S&P 500 rose 0.6% and was trading above its Aug. 15 record closing level of 2190.15. The Nasdaq Composite added 0.8%, passing its record close of 5339.52 reached on Sept. 22.

The last time the three major indexes closed at records on the same day was Aug. 15.

Smaller companies, which have been among the biggest postelection winners, headed toward fresh highs. Investors are betting that smaller, more domestically focused companies will fare better than their larger, multinational peers if the Trump administration enacts protectionist policies or the dollar continues to strengthen.

The Russell 2000 index of small-capitalization stocks climbed past its previous closing record in intraday trading Monday and was on pace for its 12th consecutive session of gains.

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Some investors cautioned that the stock market's postelection gains have been built on assumptions that policies favorable to equities will be implemented in the coming year.

“Based on market fundamentals it's not justified,” said Michael Cuggino, president and portfolio manager of the Permanent Portfolio Family of Funds, who called corporate revenue growth in the previous quarter “lackluster.”

While many investors are optimistic, “we don't have anything concrete so far,” Mr. Cuggino added.

Stock valuations have risen since the election. The S&P 500 was trading at 20.1 times its last 12 months of earnings Friday, compared with 19.5 times on Election Day and its 10-year average of 15.7, according to the WSJ Market Data Group.

Oil prices led energy shares higher Monday after Iraq's oil minister said the country would offer new proposals to cut output at next week's meeting of the Organization of the Petroleum Exporting Countries.

U.S. crude oil rose 3.9% to $47.49 a barrel, its highest level in three weeks. Marathon Petroleum gained 7.3%, Chesapeake Energy rose 6.6% and Range Resources rose 6.3%.

In government bond markets, the yield on the 10-year U.S. Treasury note was little changed at 2.337%, according to Tradeweb. The 10-year note had posted its steepest two-week yield gain since 2001. Yields move inversely to prices.

“Our bond guys said the implementation of Trump's platform will result in stronger economic growth, stronger inflation, and the Fed will tighten rates,” said Phil Orlando, chief equity market strategist at Federated Investors.

“When we saw that, we immediately increased our equity allocation and took it out of Treasurys,” he said, favoring economically sensitive U.S. stocks such as financials and industrials instead.

Financial shares rose 0.2% in the S&P 500 on Monday, while industrials added 0.5%.

The dollar paused after a 10-day rally, its longest winning streak in over four years. The WSJ Dollar Index, which measures the U.S. currency against 16 others, fell 0.3%.

The currency had tracked the bond market closely since the election, mostly rising alongside a decline in the price of the 10-year Treasury note. Fed funds futures tracked by CME Group point to a 95% chance of a rate increase next month — a move that analysts say will make the dollar more attractive to investors.

Metals prices gained, buffeted by a retreat in the dollar. Gold for November delivery snapped a three-session losing streak, rising 0.1% to $1209.60 an ounce, and copper gained 2% to $2.5125 a pound following Chinese President Xi Jinping's statement over the weekend that his government would support a Free Trade Area of the Asia Pacific. Many investors expect this to mean increased imports by China, the world's largest metal consumer.

“It's all about yield,” said Simon Derrick, chief currency strategist at BNY Mellon.

Elsewhere, the Stoxx Europe 600 was up 0.2%, following gains in Asia.

The Nikkei Stock Average and the Shanghai Composite each added 0.8% to reach their highest closing levels since January.

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