As traders bet on stocks that could do well during a Donald Trump presidency, just the fact that they're making readjustments is likely to help the broad S&P 500 index rally.
Trump's election win spurred hopes for major infrastructure spending and business-friendly tax policies, and for greater economic growth overall. Relief over a smooth Election Day, despite the Trump upset, helped stock index futures recover from an overnight plunge and sent markets surging over the next two trading days as investors piled into financials, health care, industrials and materials stocks.
Traders sold "safe" stocks in areas such as utilities and consumer staples.
"What really comforts me is all the money coming out of those safe haven trades. ... Now money is being reallocated to where it is going to be treated best," said Dan Veru, chief investment officer at Palisade Capital Management. He said leadership in the financials is "hugely positive," while the gains in industrials and materials indicated optimism on economic growth.
"At the end of the day, you're seeing a broadening out of the market — incredibly positive," he said.
While just two of the S&P 500's 11 sectors posted gains between the S&P 500's Aug. 15 high and Election Day, the number of positive performers has broadened to six since the election.