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A guide to what the 2024 US election means for Washington and the world.
Investors have poured about $140 billion into U.S. stock funds since last month’s election, with traders betting that President Donald Trump’s administration will roll out major tax cuts and reforms that will benefit U.S. businesses.
Flows into U.S. stock funds have increased by $139.5 billion since President Trump’s victory on Nov. 5, according to data provider EPFR. The rush of purchases made November the busiest month for records in 2000.
An influx of new capital has helped push major U.S. stock indexes to a series of record highs, but traders believe policy proposals such as widespread tariff hikes could push up inflation and the Federal Reserve’s The Bank dismissed concerns that this could jeopardize the Bank’s plans for further interest rate cuts. .
“The growth policies that President Trump has put forward are fully embraced,” said Deck Malarkey, managing director at fund manager SLC Management, adding that Trump’s picks for top positions in his administration are “quite market-friendly.” he added.
President Trump plans to fill his administration with capitalists, including appointing investor Scott Bessent as Treasury Secretary and cryptocurrency enthusiast Paul Atkins as Securities and Exchange Commission Chairman. The president-elect also vowed that his government would seek to reduce regulations and taxes as part of a policy aimed at boosting growth.
The S&P 500, Wall Street’s main stock barometer, has risen 5.3% since Election Day, bringing its gain this year to 28%. Small and medium-sized enterprises, which are considered to be sensitive to fluctuations in the U.S. economy, have performed even better since the election, with the Russell 2000 Index hitting a record high for the first time in three years last week.
Kevin Gordon, senior investment strategist at Charles Schwab, contrasted the large rally with past market surges in 2021 and the first half of this year.
“The healthy aspect[of the bull market]at the moment is that we don’t see a repeat of 2021, when the market hit new all-time highs but the breadth deteriorated. I think it’s a relatively healthy structure,” he said. spoke.
November was the strongest month for inflows into equity funds globally since the peak of the meme stock mania in early 2021. But U.S. strength masked weakness elsewhere, with investors pulling money from other markets deemed more vulnerable to a potential trade war. .
Funds that invest in emerging markets have suffered net withdrawals of $8 billion since the election, including about $4 billion from China-focused funds. Funds investing in Western Europe lost about $14 billion, and funds focused on Japan lost about $6 billion, according to EPFR.
U.S. stocks have consistently outperformed regions such as Europe in recent years, thanks to the strength of the tech sector. But the gap has widened since the election, a trend Bank of America analysts this week described as “American exceptionalism” trade.
“When there is geopolitical risk in the world, the United States becomes a safe haven, even if, ironically, the United States is the source of that geopolitical risk,” Malarkey said.
The recent surge has pushed year-to-date inflows to U.S. funds to $350 billion, putting them on track for a record year and investors expecting the recent rally to end soon. There aren’t many. This week alone, a number of banks and asset managers, including BlackRock, Northern Trust and BofA, predicted another big rally in U.S. stocks in 2025.
“We see the United States as continuing to stand out compared to other developed markets,” BlackRock said in its annual outlook report.
Parag Zatte, a strategist at Deutsche Bank, said the rapid pace of inflows in November is likely to slow as the post-election euphoria fades, but long-term trends continue to lead to new inflows. He said this could boost the US market next year.
“While we do not expect this pace to continue, we do think we will see fairly strong inflows in 2025,” he said, citing strong prospects for economic growth and corporate earnings, as well as healthy household cash balances. ” he said. “There are strong fundamental reasons for higher risk appetite at this time.”