Hello! This is Daniel de Visé bringing you the Daily Money edition focused on the market’s reaction to the recent elections.
Last week, the U.S. stock market experienced a significant post-election surge, reaching all-time highs. Both the Dow Jones Industrial Average and S&P 500 saw remarkable gains, each climbing about 4.7% over the week, marking their strongest weekly performance of the year. This upswing positions them for their best week since November 2023, according to Medora Lee.
Stocks Climb as Bonds Decline
As highlighted by a New York Times journalist recently, while stock market enthusiasts are typically optimistic, those in the bond market tend to be more cautious.
Following the announcement of Donald Trump’s election victory, the stock market surged to new heights, but the bond market experienced a downturn. By Wednesday, the yield on 10-year Treasury bonds had escalated to 4.479%, the highest in four months. An increase in bond yield generally indicates a drop in bond prices, as these two metrics move inversely.
While stock market investors celebrated, those in the bond market expressed concerns over Trump’s proposed fiscal policies.
Is the Traditional 60/40 Investment Strategy Still Viable?
Let’s delve deeper into the dynamics between stocks and bonds.
The 60/40 rule is a classic investment strategy that recommends maintaining 60% of your portfolio in stocks and 40% in bonds. Stocks are known for their potential high returns but come with high volatility. Bonds, on the other hand, typically provide stability during times when stock values plummet.
This investment guideline has long been a cornerstone of personal finance, though it has seen some decline in popularity among investors recently.
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Passionate about analyzing economic markets, Alice M. Carter joined THE NORTHERN FORUM with a mission: to make financial concepts accessible to everyone. With over 10 years of experience in economic journalism, she specializes in global economic trends and US financial policies. She firmly believes that a better understanding of the economy is the key to a more informed future.
