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US stocks are on a winning streak. The Dow and S&P 500 are experiencing their largest weekly gains since November, driven by positive bank earnings and optimism around policy shifts with President-elect Trump's forthcoming administration.

What does this mean?

Investors are optimistic about tax cuts, deregulation, and policy changes anticipated under Donald Trump's presidency. This has spurred a nearly 3% uptick in the S&P 500 since Election Day. Strong earnings from the banking sector and cooling inflation have boosted confidence, lifting the S&P 500 banking index. Approximately 82.1% of S&P 500 companies have exceeded earnings expectations. The market's upbeat sentiment is further encouraged by a drop in 10-year US Treasury yields to 4.6%, offering a more hospitable risk environment. Investors are closely watching upcoming earnings from companies like Truist Financial and State Street, which could influence the markets, while Salesforce saw a 1.9% increase following an upgrade, contrasted by J.B. Hunt's 9.8% decline due to missed profit targets.

The current surge reflects a market filled with confidence, fueled by anticipated policy reforms and strong earnings results. However, investors should stay vigilant as upcoming reports from key players like Fastenal and SLB could alter trends. Additionally, geopolitical events in the Middle East and significant economic data from the housing and industrial sectors might sway market directions.

The bigger picture: Economic policies in the spotlight.

Trump's influence on tariffs, tax reforms, and deregulation could reshape the economic landscape, hinting at the global market's future path. Meanwhile, the Federal Reserve's expected interest rate decisions introduce additional complexity as investors adjust their strategies based on these macroeconomic indicators.