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 rose 7 points, or less than 0.1%, to 18815. Its weekly gains are roughly 5%, which would be its biggest jump since December 2011.
After two high-volume trading days marked by sharp stock swings, Friday by comparison was markedly calm, traders said.
"The last couple days we've had big moves. Now everyone's saying, 'let's catch our breath,'" said Frank Ingarra, head trader at NorthCoast Asset Management. "We're in this period of a big rebalance in the market as people try to readthe tea leaves to know what the new president is going to do and which sectors are going to win or lose."
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 under a Trump administration.
Industrial companies in the S&P 500 are up around 7% so far this week, while the financial sector is up around 11%.
Biotechnology companies 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 0.9% Friday but was on track for a weekly gain of 14%, its biggest since 2000.
At the same time, money rotated out of some of the biggest market winners since the financial crisis, 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 in recent years -- are all down this week, despite the broader market's steep rise.
U.S. bond markets were closed for the Veterans Day holiday, but the yield on the 10-year Treasury note rose to 2.118% Thursday in its largest four-day yield gain since June 2013. Yields rise when prices fall.
Some analysts said while 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 policy -- instead of monetary -- to spark economic growth.
Some analysts said that while Mr. Trump hasn't unveiled specific policies addressing plans for fiscal stimulus, investors were still betting that Republican control of the White House and Congress meant some form of government infrastructure spending would 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.
The S&P 500 fell 0.3% Friday and the Nasdaq Composite added 0.3%. Both indexes were on track to rise more than 3% this week.
Elsewhere, European bank stocks pulled back after surging in recent days. The Stoxx Europe 600 index fell 0.4%.
Stocks in Asia were mixed. Emerging-market equities sold off, but Japan's Nikkei Stock Average closed 0.2% higher for a 2.8% weekly gain.
Write to Corrie Driebusch at firstname.lastname@example.org and Mike Bird at Mike.Bird@wsj.com
(END) Dow Jones Newswires
November 11, 2016 15:47 ET (20:47 GMT)
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