Wall street is reallocating capital

SP500

Key zone: 7,550 - 7,650

Buy: 7,700 (on strong positive fundamentals); target 7,950; StopLoss 7,630

Sell: 7,500 (on a pullback following a retest of 7,600); target 7,250; StopLoss 7,570

The shift in control of both chambers of Congress to the Democrats has forced investors to reassess the outlook for U.S. trade policy, budget spending, and business regulation. However, a substantial time gap remains between political promises and changes in corporate profits. The market is already pricing in decisions that have yet to be agreed upon.

The shift in control of both chambers of Congress to the Democrats has forced investors to reassess the outlook for U.S. trade policy, budget spending, and business regulation. However, a substantial time gap remains between political promises and changes in corporate profits. The market is already pricing in decisions that have yet to be agreed upon.

A reminder:

During the first full trading session after the elections, on November 4, the S&P 500 rose 1.6%, the Nasdaq gained 1.4%, and the Dow Jones advanced 3.1%. However, the positive performance of the indexes concealed divergent reactions across individual industries. Investors were assessing the prospects for tariff relief, changes in the geopolitical environment, and the reallocation of federal spending.

By November 11, the U.S. market had partially recovered from the initial volatility. The S&P 500 gained 1.3%, the Nasdaq Composite rose 1.6%, and the Dow Jones advanced 0.5%. Political uncertainty did not trigger a sustained outflow of capital from equities, but it changed the structure of sector demand.

The main areas of reassessment:

• Healthcare received support from expectations of expanded funding for Medicaid and Affordable Care Act programs.
• Renewable energy producers are anticipating a revision of budgetary and regulatory priorities.
• Defense and oil and gas companies came under pressure due to a possible change in U.S. policy regarding the war with Iran.
• Alcoholic beverage producers, household goods manufacturers, and retail chains benefited from expectations of easing import restrictions.

The technology sector was already participating in the broader market recovery on November 11. The initial post-election sell-off primarily led to a reduction in speculative positions without disrupting the medium-term trend.

At the same time, Democratic control of Congress does not guarantee the elimination of import tariffs. Trump retains presidential veto power, and protectionist measures may receive support from both parties, particularly in the semiconductor industry, metallurgy, and sectors related to national security.

Thus, the main source of short-term volatility is becoming the gap between the speed of market repricing and actual changes in business conditions.

So What Is the Outcome?

Before the new Congress takes office, several groups of stocks with different fundamental and speculative drivers are of practical interest.

NVIDIA (NVDA), Lam Research (LRCX), and artificial intelligence infrastructure companies remain attractive investments. The technology sector's recovery after the initial sell-off indicates that the medium-term trend remains intact.

Defense stocks remain instruments for short-term speculative trading. Following the elections, on November 4, Northrop Grumman (NOC) lost 2.7%, while Lockheed Martin (LMT), RTX Corporation (RTX), and L3Harris Technologies (LHX) each declined by more than 2%. These movements reflect a reassessment of geopolitical and budgetary expectations rather than a confirmed deterioration in corporate performance.

Caterpillar (CAT), Deere & Company (DE), and Boeing (BA) are of interest in the context of possible changes in trade restrictions and competition for market share in the U.S. industrial market. For these companies, the actual consequences of tariff policy for costs, orders, and profits will be crucial.

In healthcare, attention is focused on HCA Healthcare (HCA), Universal Health Services (UHS), and Centene (CNC). The restoration or expansion of government healthcare programs remains a potential catalyst. Until specific budget decisions are adopted, this factor remains primarily speculative.

For short-term trading, priority should be given to confirmed price movements, sector capital flows, and the market's reaction to new developments. For medium-term positions, corporate earnings, capital expenditures, economic conditions, and Federal Reserve policy remain decisive.

So we act wisely and avoid unnecessary risks.

Profits to y’all!