Stocks mellowed this past week after jolting to record highs following Donald Trump’s election victory. The initial “Trump bump” may be fading as expectations of juiced corporate earnings—thanks, in part, to deregulation and lower tax rates—become increasingly priced into the market. Election results aside, however, one prominent portfolio manager likes what she sees out of the U.S. economy and, most importantly, American consumers.
Economic data regarding GDP growth and inflation is pointed in the right direction, Stephanie Link, chief investment strategist at Hightower Advisors, told Fortune late last week. While polls suggest economic discontent played a massive role in propelling Trump’s return to the White House, there are signs general sentiment is improving.
“You have this consumer that just is unwavering,” Link said, “and a lot of that is because they have jobs, they have wage growth that’s higher than inflation—at least today—and they are spending.”
In many ways, the election results proved a positive catalyst for markets simply because they resolved an unknown, she added. The S&P 500 posted its best post-Election Day session ever, with the index gaining over 3.5% during the second week of November. Fifty-six billion dollars flowed into U.S. equities through Nov. 13, according to strategists at Bank of America, using data from EPFR Global, who were cited by Bloomberg.
Link noted that the Federal Reserve’s quarter-point cut to interest rates, along with news of China’s $1.4 trillion spending package, addressed other sources of uncertainty.
“We all were kind of breathing a sigh of relief,” said Link, who manages a $5.2 billion equity portfolio and is a regular CNBC contributor.
Consumer data comes in strong
It appears the mood on Main Street is also improving, even as many Americans remain wary about higher prices. On Election Day, the services purchasing managers’ index, a benchmark measure of economic activity, came in at its highest level since July 2022. A reading above 50 is considered expansionary; last month’s Services PMI, as its commonly called, registered 56%, a 1.1% increase from September.
“Two and a half years ago, we were just coming out of COVID,” Link said, “so you could understand why services would be so strong. Fast forward to today, the consumer still wants experiences. The consumer is still spending.”
Trump’s victory, however, illustrated that many…
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