American stocks closed south on November 28 as investors lacked reasons to push up shares. The DJIA or Dow Jones Industrial Average dropped by 0.3 percent or 54.24 points to stop at 19,097.90. Declines were led by American Express Co. and Visa Inc. at -1.00 percent and -1.31 percent respectively.
This happened after an extended rally which pushed up the important indexes. The indexes went up to record levels and lifted up the major indexes for three consecutive weeks.
Up and halt
The Standard & Poor 500 went south by 0.5 percent or 11.63 points to end at 2,201.72. Maximum gains were recorded by telecom and utilities, which were previously viewed as the defensive groups. Sharpest declines were recorded by the financial sector. It went down by 1.4 percent. Bank of America fell spectacularly, with a drop of 2.7 percent shaved off its values. Both the Standard & Poor and Dow broke their four-day consecutive winning streak. The Nasdaq Composite Index shed about 0.6 percent or 30.11 points and ended at 5,368.81. Similar behavior was exhibited by Russell 2000. It broke a winning streak of 15 sessions and decreased by 1.4 percent.
The month of November saw Wall Street rally, the gains particularly robust when Donald Trump became the President-Elect of the United States. It is expected that the new president will push policies which will spur economic growth. Such policies could be related to infrastructure spending, financial deregulation, environmental deregulation and huge corporate tax cuts.
Investors and Trump
According to Phil Orlando of Federated Investors, strategic investors like him positioned themselves conservatively before and during the election process. However, the results compelled them to increase the equity allocation, decreasing the bond position. This strategy has been followed by a lot of firms and this has been the cause of the rally which persisted for a period of three consecutive weeks. Orlando then added that after such gains, such consolidations come as so surprise.
Paul Nolte, a portfolio manager at Kingsview Asset Management, concurred with Orlando’s views. He said that stocks were overbought as investors renewed their faith in a Trump presidency. They expect less regulation and stronger growth. About the hiatus in rally, he said that it was bound to happen. There was a robust move with persistent rallies during the last hours. It is expected that there will be a pullback in the market.