The S&P 500 hit a document excessive yesterday (6 November) following the end result of the US election. The index completed up 2.53% to shut at 5,929 factors. Regardless that the index did properly, some particular person US performers did even higher. Primarily based on the kind of shares that rallied, I really feel I can be taught one thing about what may occur from right here.

Takeover potential

The very best performing inventory yesterday was Uncover Monetary Providers. The share price jumped by 20%. This additionally pertains to Capital One, which surged by 15%.

There’s at the moment a $35bn deal on the road, with Capital One seeking to take over Uncover. This may create the most important credit-card issuer within the nation by mortgage quantity. Nevertheless, it’s nonetheless pending approval in authorities. With a Trump victory yesterday, there’s much more optimism that he would possibly give the inexperienced gentle shortly to get this completed. Trump is seen as pro-business and has made it a key coverage pledge to get the financial system going once more.

I believe this can be a actually attention-grabbing instance of how shares can transfer based mostly on one thing like an election outcome. It highlights that politics does affect the inventory market, together with particular conditions like this one.

After all, nothing concrete has been completed, so the bounce yesterday in these two shares is only based mostly on hypothesis. However provided that Uncover was the biggest gainer exhibits the significance that buyers placed on what simply occurred.

A retail investing favorite is again

One of many different prime performers yesterday was Tesla (NASDAQ:TSLA). I’m severely serious about shopping for this inventory and actually ought to have purchased it earlier this summer time when the inventory dipped!

Over the previous yr Tesla shares are up 30%, with 15% of this transfer coming yesterday. One of many key elements right here was the truth that Elon Musk has turn into a vocal supporter of Trump on his marketing campaign path. So I really feel like some speculative merchants have been utilizing Tesla shares as a method of expressing a view that Trump would win. Equally, if he had misplaced I believe the inventory would have fallen in worth.

I don’t spend money on shares for such type of hypothesis. However trying ahead, I believe Tesla may do properly. With Musk being near the President, I believe he may assist to affect coverage concerning the push in direction of electrical autos. He may additionally foyer for extra authorities help, beneficial phrases on subsidies, and different elements that ought to finally profit Tesla.

Tesla additionally stands to achieve from a few of Trump’s insurance policies, together with decrease taxation. With some manufacturing crops within the US, it might discover extra of a aggressive benefit versus friends overseas, particularly if the opposite firms get hit with tariffs.

As a danger, Tesla inventory has a price-to-earnings ratio of 128. That is very excessive and will point out that the inventory is overvalued.