The Dow Jones industrial average closed above 19,000 Tuesday as investors bid up large-cap banks and multinationals in the last two weeks on hopes President-elect Donald Trump will usher in a new era of deregulation, tax cuts and economic growth.
But he may also bring with him higher interest rates and a surging U.S. dollar.
And that's not always great for the Dow, history shows. In fact, it may favor shares of smaller companies.
Using hedge fund analytics tool Kensho, we found what happened to the Dow, the S&P 500 and the small-cap benchmark Russell 2000 index during six-month periods when both the U.S. Dollar index and the 10-year Treasury yield increased significantly.
Specifically, our search looked for six-month periods in the last 30 years when the dollar index increased 5 percent and the price of the 10-year Treasury (which moves inversely to its yield) fell 5 percent. This occurred seven times since 1986.
Here's what happened to the major indexes...