By Philip van Doorn, MarketWatch
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It’s been about a year since President Trump took office Jan. 20, 2017. It’s sometimes been contentious and even chaotic. But, for investors, it’s been among the best of times.
The S&P 500 Index /zigman2/quotes/210599714/realtime SPX +0.06% of the largest U.S. stocks has returned 26.3% since Jan. 19, 2017, the day before Trump’s inauguration. This next year could be more of the same, helped by economic growth at home and abroad, low U.S. unemployment and the biggest federal tax cut in a generation.
“There’s still meat on the bone,” said Bill McMahon, chief investment officer at Charles Schwab unit ThomasPartners.
He said in an interview that Wall Street analysts have not yet fully incorporated the tax cuts Trump signed into law on Dec. 22 into their earnings estimates. That means those estimates will be rising, reducing stocks’ price-to-earnings ratios and, therefore, supporting more share-price gains.
More on tax cuts: Here’s what every S&P 500 company actually pays in taxes
Michael Cuggino is “overweight” stocks in his Permanent Portfolio /zigman2/quotes/205061618/realtime PRPFX -0.68% which is managed to take advantage of all sorts of market conditions. In an interview, he said growth in emerging economies means increased demand for commodities, which bodes well for the energy and materials sectors.
Cuggino said other sectors — banking, industrial technology, biotechnology, medical equipment and services, and transportation — are also getting a tailwind.
“Internationally focused U.S. businesses will do very well,” he said, as strengthening economies abroad have pushed down the value of the dollar, making U.S. exports more attractive.
Jim Brilliant, who manages the CM Advisors Fixed Income Fund /zigman2/quotes/206487783/realtime CMFIX 0.00% , said in an interview that simultaneous economic growth around the world will signal a “sector rotation” for stocks away from higher-growth industries into value plays in the industrial, energy and materials sectors.
Breaking down the S&P 500
Here’s how the 11 sectors of the S&P 500 have performed since Jan. 19, 2017, and since the close on Nov. 8, 2016, before Trump was elected later that night:
| Sector | Total return - Jan. 19, 2017-Jan. 17, 2018 | Total return - Nov. 8, 2016-Jan. 17, 2018 |
| Information Technology | 43.4% | 49.5% |
| Financials | 29.9% | 50.2% |
| Health Care | 28.0% | 31.8% |
| Consumer Discretionary | 27.0% | 35.7% |
| Materials | 26.5% | 36.5% |
| Industrials | 25.7% | 37.4% |
| Consumer Staples | 13.8% | 13.4% |
| Energy | 7.7% | 15.2% |
| Utilities | 7.5% | 7.2% |
| Real Estate | 6.3% | 8.3% |
| Telecommunications | -2.4% | 8.8% |
| S&P 500 | 26.3% | 34.2% |
| Source: FactSet | ||
That’s a broad rally, with most sectors posting double-digit gains.
S&P 500 stocks
The large-cap benchmark index actually includes 505 stocks, because several companies have two classes of common shares included in the index. Two companies have been traded publicly for less than a year.
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