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Dow Gets a Lift as Trump Takes Office -- WSJ

21 Jan 2017 7:32 am

Swings sparked by the new president continue; blue chips fall 0.3% for the week
By Corrie Driebusch and Riva Gold 

The Dow Jones Industrial Average rose nearly 95 points after Donald Trump was sworn in as president.

Still, the blue-chip index fell for a second consecutive week for the first time since October, reflecting how some popular postelection trades have waned.

Stocks and bonds were choppy around Friday's inauguration ceremony.

The Dow was up 98 points ahead of Mr. Trump's address, then pared gains to a 39-point increase as he spoke and stock-trading volume spiked, according to FactSet. The index ended the day up 94.85 points, or 0.5%, at 19827.25.

It was the latest instance of swings sparked by the new president. On Tuesday, the dollar fell to its lowest level in a month after Mr. Trump called the dollar "too strong." On Jan. 11, health-care stocks dropped after he criticized the pharmaceutical industry during his first press conference as president-elect.

"We're going to see high intraday volatility on off-the-cuff remarks," said Tom Digenan, head of U.S. equities at UBS Global Asset Management. "We don't know how onerous protectionist measures will be, what the tax rate will be or what deregulation we'll get."

On Friday, Mr. Trump said his administration would follow "two simple rules: Buy American and hire American." He also promised new roads, bridges and highways.

The S&P 500 added 7.62 points, or 0.3%, on Friday to 2271.31, and the Nasdaq Composite rose 15.25 points, or 0.3%, to 5555.33. Both indexes ended the week lower, down 0.1% and 0.3%, respectively. The Dow posted a weekly decline of 0.3%.

The yield on the 10-year U.S. Treasury note settled at 2.466% Friday, compared with 2.5% ahead of Mr. Trump's speech and 2.461% Thursday. Yields rise as prices fall.

Since the November election, investors have broadly bought the dollar and U.S. stocks and sold long-dated government bonds on expectations of tax cuts, spending increases and rolled-back regulation.

The WSJ Dollar Index, which measures the currency against 16 others, is up more than 4% since the election. On Friday, the index slipped 0.3%.

Wall Street analysts haven't matched investors' expectations for Mr. Trump's impact on corporate earnings. Analysts' earnings estimates for S&P 500 companies in 2017 remain at about $133 a share, roughly the same level as in October, according to FactSet.

"There is reason to be optimistic and for stocks to go up, though maybe not so quickly as sentiment pushed it in that direction," said Paul Christopher, head global market strategist at Wells Fargo Investment Institute.

Financials, the best-performing S&P 500 sector from Election Day to year-end, lost ground in the past week as investors pulled money out of the sector. On Friday, financials gained back a bit, rising 0.5%, but the sector still ended the week down 1.6% and is down 0.6% in 2017.

Financial-sector stock funds snapped a 16-week streak of inflows Wednesday, and industrial-sector funds posted their biggest outflow since 2015, according to fund-tracker EPFR Global, reversing popular trends following November's election.

Flows into gold funds hit a 10-week high. Friday, gold for January delivery rose 0.3% to $1,204.30 an ounce. Gold prices are up 4.7% so far this year.

Write to Corrie Driebusch at corrie.driebusch@wsj.com and Riva Gold at riva.gold@wsj.com
 

(END) Dow Jones Newswires

January 21, 2017 02:32 ET (07:32 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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