analysts are warning investors to take a deep breath and
fight the inclination to respond if the stock market
tests their nerves Wednesday, as America wakes up to
Donald Trumpís stunning upset in the U.S. presidential
worldwide plunged overnight as Trumpís victory took
investors by surprise.
one point during the long evening that eventually saw
Trump win enough electoral votes to become the nationís
45th president, futures for the Dow Jones Industrial
Average dropped almost 800 points, suggesting Wednesday
could be a nerve-wracking day. Overseas markets did the
same. Japanís stock market fell 5.36 percent for the
day, and European market futures fell too.
may be more relaxed Wednesday after news of Trumpís
stunning upset sinks in. Shortly after 7:30 a.m.
Wednesday, Dow futures were down less than 300 points,
or 1.5 percent, to about 18,000.
market moves last summer provide a warning to people
wondering if they should dump their stocks and run for
safety. On June 24, as the markets were shocked by the
vote for the Brexit, or the decision by the British
people to leave the European Union, the Dow dropped 900
points during the two days following the vote.
predicted the vote would set off a European recession
and infect the U.S. But within a couple of weeks, the
market recovered as the dire consequences of the vote
didnít materialize and investors who sold their stocks
were kicking themselves for their haste.
will debate in the days ahead what some of Trumpís
positions and trade policy and immigration may do to the
economy. Leading up to the election, they warned that
Trumpís protectionist policies could stunt global
assume there will be a dramatic change, but I donít
think thatís accurate," said Jim Paulsen, Wells
Capital Managementís chief investment officer.
noted that presidents cannot take action on their own.
They must work with Congress and politicians with
different points of view. As the political process plays
out, Paulsen said, "I donít think there will be a
lot of change."
the realities sink in, he expects the stock market to
recover as it did within a few weeks of the Brexit vote.
most extreme reaction in the market as the vote was
being counted Tuesday night was in the Mexican peso,
which fell about 13 percent on the assumption that
business between the U.S. and Mexico could be stifled by
Trumpís pledge to change trade policy.
with uncertainty about Trumpís plans, investors acted
abruptly to sell stocks. They bought gold, Japanese yen
and U.S. Treasury bonds. As they moved money into bonds,
U.S. Treasury bond yields fell about 10 points.
could remain down somewhat if investors think
nervousness about the economy and the stock market will
continue and keep the Federal Reserve from raising
interest rates in December. If the Fed delays, that
would calm investors worried that rising interest rates
could put a damper on the economy and stock market.
Higher rates would make it more expensive for businesses
to borrow money and perhaps cause them to delay
expansions. Higher rates also can deter individuals from
Jack Ablin, chief investment officer for BMO Private
Bank, expects the market reaction to the Trump victory
to be short-lived, and he thinks the Federal Reserve
will raise rates.
if the stock market as a whole quakes amid concerns
about a Trump presidency, analysts expect certain
segments of the market to do well. Coal-mining stocks
and coal-using utility companies, for example, could do
well, and the energy sector in general rose during the
campaign when Trump was doing well in the polls.
Analysts also expect health care stocks to get a lift if
Trump presses for a remake of Obamacare, as discussed in
Trumpís positions are debated in the days ahead,
Paulsen said the market could be volatile. But since
Paulsen thinks there will be more talk than extreme
changes in government policy, he said he would use
downturns in the stock market as an opportunity to buy