By Corrie Driebusch and Mike Bird
The stock market's election-week rally stalled Friday, but the Dow Jones Industrial Average remained on track for its best week in nearly five years.
The blue-chip index recently fell 28 points, or 0.2%, to 18779. Its weekly gains are roughly 5%, which would be its biggest jump since December 2011.
Industrial companies and banks have led the surge in recent sessions, as investors poured money into stocks they believe could benefit from possible increased government spending, decreased regulation and a pickup in inflation. Industrial companies in the S&P 500 are up roughly 7% so far this week, while the S&P 500 financial sector is up more than 10%.
Biotechnologycompanies also jumped as some analysts and investors said drug-pricing restrictions would have been more likely under Democrat Hillary Clinton. The Nasdaq Biotechnology index slipped 1.7% Friday but was on track for a weekly gain of 13%, its biggest since 2001.
At the same time, money rotated out of some of the biggest market winners over the past seven years, including some technology companies and government bonds. These assets have benefited in a world flush with monetary easing but struggling with weak economic growth.
Shares of Amazon.com, Google parent Alphabet and Facebook -- some of the most popular stocks over the past few years -- are all down this week, despite the broader market's steep rise.
U.S. bond markets were closed for Veterans Day, but through Thursday the yield on the 10-year Treasury note rose to 2.118%, its largest four-day yield gain since June 2013. Yields rise when prices fall.
Some analysts saidwhile the election of Donald Trump this week invigorated this rotation, the shift had already started in recent weeks.
"We've been seeing growth firming and inflation expectations picking up globally," said Brian Leung, investment strategist at Bank of America Merrill Lynch. Data released late October showed core inflation reached a two-year high in the third quarter. Similarly, even before Mr. Trump's election, there were discussions among politicians around the world about the potential of using fiscal -- instead of monetary -- policy to spark economic growth.
"What Trump did was [his election] really made the story take off," said Mr. Leung.
While some analysts said Mr. Trump hasn't unveiled specific policies addressing plans for fiscal stimulus, investors are still betting that with Republican control of the White House and Congress some form of government infrastructure spending will pass.
"People are looking at Trump and weighing the two sides of him, and they have inflation in common," said Mr. Leung. He has the "protectionist, antitrade, immigration control side, which could on its own increase inflation. On the other side he has control of Congress, so he has a lot of leeway to cut taxes and implement infrastructure spending."
"For now, the market is pricing in at least a little bit of fiscal stimulus," he added.
In other markets, European banking stocks pulled back after surging in recent days. The Stoxx Europe 600 index fell 0.4%.
Stocks in Asia were mixed Friday. Japan's Nikkei Stock Average closed 0.2% higher, but emerging-market equities in Asia sold off.
The Philippine PSEi closed down 2.9%, Indonesia's Jakarta Composite Index dropped 4.0% and South Korea's KOSPI index ended the day down 0.9%.
Write to Corrie Driebusch at email@example.com and Mike Bird at Mike.Bird@wsj.com
(END) Dow Jones Newswires
November 11, 2016 11:23 ET (16:23 GMT)
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