U.S. stock rally falters near records as Trump platform is assessed

Bloomberg reports that banks have surged to their highest level since May 2008, and drugmakers have gained.

Facebook and Amazon, however, are leading a rout in tech shares, possibly due to “concern about the impact of Trump’s policies on trade overseas, where U.S. technology companies thrive.”

The rally in U.S. stocks faltered after the Dow Jones Industrial Average rose to an all-time high, as investors speculated on the industries and companies that stand to benefit from Donald Trump’s surprise election victory.

Banks and health-care shares surged on bets a Trump administration will roll back regulatory scrutiny of the industries. Industrial shares rallied as the Republican plans to boost infrastructure spending. Tech shares plummeted, with losses mushrooming in the biggest names. Utility and real-estate stocks tumbled as a rout in bonds pushed the 10-year yield higher, damping demand for the shares’ relatively high dividend payouts.

“People are going through the possibilities about what Washington looks like today and what Washington can do or not do for them,” said John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York. “Corporations feel there’s a less restrictive hand. People may take that as a positive. It’s the end of the uncertainty.”

The Dow rose 125.25 points, or 0.7 percent, to 18,712.25 at 11:28 a.m. in New York, slipping from a trip above its Aug. 15 record. The Nasdaq 100 Index plunged 2 percent. The S&P 500 Index fell 0.2 percent to 2,160.03, erasing an advance that reached 0.9 percent. The small-cap Russell 2000 Index jumped 1.4 percent and is up 4.6 percent since Trump’s election.

Amazon.com Inc. sank 5.2 percent to lead the rout in technology. JPMorgan Chase & Co. jumped 3.6 percent and Goldman Sachs Group Inc. climbed 2.9 percent. Drugmakers advanced, led by Pfizer Inc.’s 2.9 percent rally. Boeing Co. adding 2.7 percent. Procter & Gamble Co. plunged 4 percent.

Financial and health-care industries have surged since Trump’s surprise win on Tuesday, rallying on expectations that the president-elect and Republican-controlled Congress will roll back regulations. Trump’s promise to revive American infrastructure means commodities used to build everything from airports to bridges will benefit under his presidency, according to Goldman Sachs Group Inc.

“Yields are moving their way higher, that’s good for banks,” said Art Hogan, chief market strategist and director of research for Wunderlich Securities in Boston. “If there’s going to be a friendlier regulatory environment that’s going to be good for banks. That’s the tailwind behind financials we haven’t seen for a long time.”