Supported by investor optimism and fundamentals, U.S. stocks continue to hit new highs, and three important indicators suggest that the bull market in U.S. stocks will not dissipate anytime soon.
After last week’s election, brokers said that there was a significant increase in trading volume during extended trading hours. Robinhood (NASDAQ:HOOD) reported that its night trading volume has soared to 11 times its usual level since the launch of 24-hour trading last year.
Similarly, Interactive Brokers (NASDAQ:IBKR) set a record with 349,910 trades executed, including 188168 U.S. equities and 161742 derivatives.
Options trading volume also exceeded $160 billion, a record high, and confidence was strong across sectors. A strong combination of positive seasonal trends, election results, and new market leaders supported the continued rally in U.S. equities.
There are many factors driving the strength of U.S. stocks, and there are three key reasons why there is still plenty of room for upside in the future:
U.S. stocks tend to be strong after elections
History shows that markets tend to see a rally after a presidential election, and this year was no exception.
The Dow Jones Industrial Average, S&P 500, Nasdaq and Russell 2000 all rose sharply after the election.
On average, the Dow Jones Industrial Average rose by 2.38%, the S&P 500 by 2.03%, the NASDAQ by 1.50%, and the Russell 2000 by 4.93%.
Historically, strong post-election performance has supported this prospect, with a nine-in-ten probability of a rise in stocks in the year after the election, with an average increase of 15.2%.
Technology stocks will help the Dow Jones rise
Technology stocks continue to dominate the market, and the latest correction to the Dow Jones underscores the growing importance of the technology sector. The inclusion of Nvidia (NASDAQ:NVDA) in the Dow Jones index, replacing Intel (NASDAQ:INTC), marks a major shift.
Nvidia stock price chart, source: Investing.com
Today, the Dow Jones is led by tech giants such as Nvidia, Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) as a highly tech-weighted index. Investors are betting on continued strength in the tech sector, which has historically been a key driver of market growth.
Nvidia, in particular, has performed particularly well this year. Nvidia will soon report results, which are expected to be strong, which is expected to further boost investor optimism.
The Big Seven Daily
The market is resilient, thanks to strong consumer confidence, which is currently at an all-time high.
The latest Conference Board survey showed that confidence that stock prices will continue to rise through 2025 is stronger than ever, and traders have built the largest long positions in U.S. stock futures in history.
The optimistic outlook suggests that investors are not just buying with the trend, but also betting on continued growth in the future.
In terms of investor sentiment, the latest American Association of Individual Investors (AAII) survey showed that bullish sentiment has risen, rising 2.1 percentage points to 41.5%, well above the historical average of 37.5%.
At the same time, bearish sentiment fell by 3.3 percentage points to 27.6%, still below the long-term average of 31%. Reflecting an overall optimistic outlook, investors are confident about the market direction at the end of the year.
With the combination of investor confidence, historical trends, and the dominance of the technology sector, the bull market in U.S. stocks shows no signs of dissipating.
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