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Stocks in the past week surged, with the Dow rallying 5 percent to a new high, its best gain in five years. The Dow ended Friday at 18.847, and the S&P 500 was up 3.8 percent at 2,164. The Nasdaq was up 3.7 percent, but the small-cap Russell 2000 outperformed with a more than 10 percent gain.
At the same time, US Treasury yields zipped higher, particularly at the long end. The 10-year Treasury yield jumped to 2.15 percent, the highest level since January, from a pre-election level of 1.8 percent.
Literally overnight Tuesday into Wednesday, market sentiment shifted, and so did the stocks that were in favor. Financials ripped higher, up 11.3 percent for the week on the outlook for higher rates and less regulation. That was the best week for the sector since the bull market began in 2009.
Industrials bounced nearly 8 percent, and the Industrial Select SPDR Fund ETF had its best week in five years. Health care jumped 6 percent on Trump's vow to eliminate parts of Obamacare and on relief that Hillary Clinton did not win. She was outspoken on drug pricing and viewed as negative for drugs and biotech. The IBB iShares Nasdaq Biotechnology ETF jumped 14.4 percent in its best week ever.
As US yields rose, emerging markets were also stung by a sharp jump in rates. Their currencies were slammed, especially the Mexican peso, which was down more than 10 percent on the week.
Investors will be watching out for any comments from Trump on many topics, including trade. In an interview Friday with The Wall Street Journal, he said he would potentially impose tariffs on products of companies that relocate overseas.
Oil slumped in the past week, sliding 15 percent amid supply concerns. West Texas Intermediate futures were trading just above USD 43 late Friday. The S&P energy sector, however was up 2 percent even with the breakdown in crude futures.
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