‘Trump rally’ on Wall Street slows a bit

It was perhaps the most surprising trade in a record-setting week on Wall Street: How quickly investors swapped presidential pre-election jitters for enthusiasm at Donald Trump’s victory over Hillary Clinton.

That enthusiasm — call it the Trump rally — ultimately propelled the Dow Jones industrial average to consecutive all-time highs this week and gave the Standard and Poor’s 500 index its biggest weekly gain in two years. The rally lost some steam Friday, pulling the S&P 500 slightly lower.

The Dow rose 39.78 points, or 0.2 percent, to 18,847.66. The S&P 500 index fell 3.03 points, or 0.1 percent, to 2,164.45. The Nasdaq composite index gained 28.32 points, or 0.5 percent, to 5,237.11.

For months, investors viewed Trump and his proposed agenda as a more risky bet for the economy and the markets than his rival, who had been widely perceived as the candidate most likely to keep the status quo in place.

But then the billionaire won. And, more importantly, Republicans retained majorities in the House and Senate, ensuring that the president-elect’s party will be in control when he takes office on Jan. 20.

“I don’t think people planned on a straight Republican sweep,” said J.J. Kinahan, TD Ameritrade’s chief strategist. “All of a sudden you realize some of the things that the markets have been wishing for have a chance to be done. That’s why we’ve rallied so much. This scenario was such a low probability, nobody was planning for it.”

Investors are now betting that Trump and a Republican-controlled Congress will have a clear pathway to boost infrastructure spending, cut taxes and relax regulations that affect energy, finance and other businesses.

That agenda flipped investors’ priorities this week away from defensive assets like bonds, utilities and phone companies, which traders had favored for much of this year, to health care, industrial and financial stocks, which notched their best week since 2009.

The trades mark a reversal from the last couple of years, when investors coped with government gridlock, sluggish economic growth and low interest rates by prizing less-risky assets and stocks like phone companies and utilities with high dividends.

Health care stocks are perhaps the best example of how investors’ mindset has changed in just a few days.

The sector had been one of the worst performers this year in anticipation that Clinton, who had mostly maintained a lead in the polls, would push to expand the government’s role in health care and curb price increases by drugmakers.