Take a look at the Dow Jones Industrial Average, and you don’t even need to read the x-axis to see when Donald Trump won the election.
Despite a number of reports from the world’s top investments banks, predicting an immediate market selloff following Trump’s victory, those fears weren’t valid beyond a few hours.
One part of the market has outperformed in particular since Trump’s victory: small-cap stocks. They’ve rallied 11.57 percent since Trump’s victory, compared to 8.67 percent for the Dow Jones (which is a price-weighted average of 30 stocks, all of which have market values in the hundreds of billions), as of 1:00PM EST today.
It should come to no surprise then that small-business optimism has taken off in an historic rally following November 8th. According to Bloomberg:Optimism among America’s small businesses soared in December by the most since 1980 as expectations about the economy’s prospects improved dramatically in the aftermath of the presidential election. The National Federation of Independent Business’s index jumped 7.4 points last month to 105.8, the highest since the end of 2004. While seven of the 10 components increased in December, 73 percent of the monthly advance was due to more upbeat views about the outlook for sales and the economy, the Washington-based group said.
The share of business owners who say now is a good time to expand is three times the average of the current expansion, according to the NFIB’s data. More companies also said they plan to increase investment and keep hiring, which reflects optimism surrounding President-elect Donald Trump’s plans of spurring the economy through deregulation, tax reform and infrastructure spending.
“Rising confidence adds to the economy’s upward momentum,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said in a note. At the same time, the “NFIB membership appears to be disproportionately Republican, so it is possible that the data will start overstating strength, opposite the pattern during the Obama administration.”
The NFIB report was based on a survey of 619 small-business owners through Dec. 28. Small companies represent more than 99 percent of all U.S employers, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise with no more than 500 employees.
“We haven’t seen numbers like this in a long time,” Juanita Duggan, president and chief executive of the NFIB, said in a statement. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy. Business owners are feeling better about taking risks and making investments.”
Not bad considering Donald Trump hasn’t even taken office yet.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]