How Historic Was The Market Action Last Week?

November 15, 2016

5 minute read

Last week was historic on so many levels. Nearly everyone expected a Trump election victory to lead to an equity selloff with a decline in yields, as investors moved to the safety of bonds. Well, to the surprise of most of us, the total opposite happened. As Ryan Detrick, Senior Market Strategist, put it, “Last week was a harsh reminder of what can happen when everyone expects the same outcome, as Mr. Market likes to make sure the masses are usually wrong. Now with the initial shock over, we can start to focus again on the economy and President-elect Trump’s polices.”

Here is a list of some of the truly remarkable things we saw last week:

The S&P 500 gained 3.8%, its best weekly gain since October 2014 off of the Ebola lows. The other week it gained this much recently was the first week of January 2013, when the fiscal cliff was resolved. The S&P rallied more than 2% on Monday on increasing hopes of a Clinton victory. Equities then gained the final three days of the week on the “Trump rally” – a combination of optimism over the economy and certainty around the election outcome.
S&P 500 futures plunged 6% Tuesday night, only for the S&P 500 to eventually finish higher by more than 1% by Wednesday’s close. 2008 was the last time we saw a move like that.
The S&P 500 was down nine days in a row heading into the week, and just missed rallying all five days last week, closing with a slight 0.1% drop on Friday.
As good as the week was for equities, it was that bad for bonds, as the 30-year Treasury yield rose to 3% for the first time since January. Meanwhile, the 10-year yield rose above 2% for the first time in 10 months. On the week, the 10-year yield jumped 21%, the largest weekly gain ever.
After gaining for a record nine days before the election, the CBOE Volatility Index (VIX) dropped nearly 23% on Wednesday for its largest daily drop in five years. On the week, it tanked 37%, the third largest drop ever. The largest ever was a 42.7% drop the week after Brexit. So 2016 now has two of the three largest weekly drops ever for the VIX!
Biotech was a big winner, with the Biotechnology Index (BTK) up 17%– the best weekly gain since July 2009.
Gold was down more than 6% last week, for its worst week since June 2013. Gold was viewed as a favored play should Trump win.
Small caps, as measured by the Russell 2000, exploded higher by 10.2% for the week, the best weekly gain since early December 2011.
Microcaps did even better, as the Russell Microcap Index was up nearly 12% – the best week since the Financial Crisis. Microcaps have gained more than 2% for a record three consecutive days, tying the previous record from July 2010.
The S&P 500 Industrials Index closed at a new all-time high and gained more than 8% for the week.
The S&P 500 Financials Index gained more than 11% for the week, the most since May 2009.
Copper ended a record 14-day win streak on Friday in spectacular fashion. Up more than 6% in the morning, it eventually closed lower by 2%. Copper had made a new 52-week high earlier in the week, for the first 52-week high since February 2011, ending a record 1,141 days without a new high.
What could happen next? When the S&P 500 gains more than 3% for the week, the following week has been higher the past nine times going back to 2012.
Lastly, if you think the action in global markets was crazy, it didn’t stop there – as college football saw the number 2, 3, and 4 teams all lose in the same weekend for the first time in 31 years.

What a week! For more on our thoughts on the election and which sectors could benefit, be sure to read our Weekly Market Commentary due out later today.

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Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

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