The most short-lived major market crash of all time ended as quickly as it began today, with the Dow Jones Industrial Average bouncing over 1,000 points off its overnight lows following Trump’s surprise victory.
Dow futures had been down more than 800 points, and were set to almost certainly open lower today, but somehow recovered to open higher than yesterday’s close.
The Dow jumped as high as 18,544.35 in Wednesday afternoon, marking a massive 1,000 point turnaround from its lows:
Clearly, traders overreacted to the implications of a Trump win, but the recovery has perhaps been even more over an overreaction. The Dow actually climbed within 1% of its all-time highs, as the several day losing streak leading up to the election — and its subsequent two-day recovery, then overnight crash — were all completely erased.
This type of market action is unusual to say the least, but perhaps not totally unexpected given the supposed long odds of a Trump victory.
Bonds are still hurting badly, however, trading at their lows of the day, in proof that the election result does in fact have serious ramifications for the markets.
Early sector winners from Trump’s victory include Biotech, Metals & Mining, and Pharma, while losers are Bonds, Utilities, Real Estate, and just about every other rate-sensitive sector. Meanwhile, the VIX “fear gauge” is down 17% in a sign that investors aren’t worried about a major pullback in the works.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $1.63 (+0.89%) to $185.01 per share in Wednesday afternoon trading. The only ETF tied to the DJIA has now gained 6.33% year-to-date.