The political landscape has taken a historic turn, and the markets are already reacting. Last week, Donald Trump secured victory in an increasingly polarized political climate. In the wake of the election, we're seeing significant movement, particularly in small-cap stocks. The Dow Jones Industrial Average (DJIA) has jumped to new highs, and the Russell 2000 is nearing a record-breaking level. Could this be the start of a fresh rally for small-caps, or are there more hurdles ahead?
Seasonality also plays a key role—historically, mid-October often marks the end of a seasonally weak period for stocks. Last week’s post-election rise in the S&P 500 suggests the potential for further gains. Looking at NDR’s historical analysis from Election Day to year-end, the DJIA has shown mixed results following a Democratic loss, but post-WWII, S&P 500 gains have shown a median of 4.6% (table above). This could signal additional momentum for the market in the coming months.
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