U.S. stock markets maintained their upward trend on Friday, reaching new record highs, with the Dow and S&P 500 experiencing their most successful week of the year.

The Dow Jones Industrial Average rose by 259.65 points, or 0.59%, closing at a record 43,988.99, while the S&P 500 increased by 22.44 points, or 0.38%, to close at an all-time high of 5,995.54. Both indices have gained approximately 4.7% over the week, marking their top performance since November 2023.

The Nasdaq composite finished up 17.32 points, or 0.09%, at 19,286.78, nearing its peak of 19,318.56 achieved earlier in the day. This week, the Nasdaq is up 5.7%.

The stock market saw significant gains on Wednesday due to optimism regarding President-elect Donald Trump’s potential tax reforms and deregulation efforts, as noted by analysts. The optimism carried over into Thursday after the Federal Reserve reduced its short-term benchmark interest rate by a quarter percentage point, indicating possible future rate cuts, though specifics remain uncertain. On Friday, the markets received a boost after the University of Michigan reported that consumer sentiment unexpectedly increased to 73.0 in November from 70.5 in October, along with the lowest inflation expectations seen since December 2020.

“Consumer confidence soared in November while short-term inflation expectations fell, creating an ideal economic scenario,” stated Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.

Will the Stock Market’s Uptrend Persist?

While the stock market may experience some pauses in its rise, many analysts anticipate further gains in the near future, particularly if Republicans secure control of both the House and Senate. The Senate has already been won by the Republicans, and while votes are still being counted in the House, opinions suggest they will likely maintain a slender majority.

“Following the Republican victory, we believe the implications of the U.S. election will continue to energize the markets,” said Mark Dowding, the chief investment officer at BlueBay, part of RBC Global Asset Management.

Investors Reenter the Market

Trump’s election also seems to have encouraged some investors to enter the market, according to recent data.

Wealthfront, an automated investment service, reported a remarkable 146% increase in new stock investing accounts the day after the election compared to Election Day, along with a 286% surge in deposits into stock investment accounts. There was also a 433% increase in transfers to automated investing accounts compared to the previous day.

In total, $20 billion flowed into U.S. equity funds the day following Trump’s significant win, marking the largest single-day inflow in five months, as noted by strategists at Bank of America.

“The current market rally indicates that investors are either celebrating the election results, experiencing reduced uncertainty following the elections, or perhaps a combination of both,” commented Alex Michalka, vice president of investment research at Wealthfront. “Regardless, it’s encouraging to see millennials making prudent financial choices by investing in the stock market.”

Key Stock Performers This Week

Several stocks and sectors gained prominence this week following Trump’s victory, including:

• Tesla: Share prices surged, pushing the company’s valuation to $1 trillion for the first time in two years, as investors anticipated potential favorable policies due to CEO Elon Musk’s relationship with Trump. Wealthfront noted a 228% increase in investments in Tesla on Wednesday compared to Election Day.
• Bank stocks rose due to expectations that the new administration might facilitate mergers and acquisitions, which is a lucrative area for large banks, as indicated by analysts at JP Morgan.
• Energy-related stocks surged as Trump expressed his intention to promote drilling to ensure American energy independence.
• Bitcoin reached an all-time high close to $77,000, thanks in part to Trump’s endorsement of the cryptocurrency during his campaign, where he even proposed a federal Bitcoin reserve and emphasized the necessity of boosting Bitcoin mining in the U.S.

The Situation with Bond Yields

The yield on the 10-year Treasury bond initially surged on Wednesday after Trump’s election victory. However, most economists predict that Trump’s policies involving significant tariffs, deportations, and tax cuts could lead to an increase in the deficit and inflation. By Friday afternoon, the 10-year yield had returned to its starting point for the week.