U.S. stocks rose to all-time highs on Friday as investors shook off a widely unexpected result to the general election in the United Kingdom.
The Dow Jones industrial average rose about 115 points to a record, with Goldman Sachs contributing the most gains.
The S&P 500 gained 0.5 percent to reach a record high, with financials leading advancers. Financials received a boost from higher bank stocks, as the SPDR S&P Bank ETF (KBE) advanced 2.7 percent. The ETF was also on track for its best week of the year.
The Nasdaq composite hit a record high at the open before trading 0.3 percent higher.
“Investors have been pretty bullish all year,” said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners. “All of the fundamentals are there for the market to go higher, but from time to time we become concerned with political uncertainty.”
Prime Minster Theresa May’s Conservative party lost its parliamentary majority in the process, coming up with 318 of 650 seats. Conservatives held a 17-seat majority before the contest. Some pollsters expected May’s party to retain the majority while others expected them to build on it. That said, no other party came out with a clear majority.
“The muted response from financial markets so far reflects their sense of déjà vu. After all, in the past 12 months they have also had to absorb the shocks of the EU referendum result and President Trump’s election,” said Lucy O’Carroll, chief economist at Aberdeen Asset Management.
“That said, we could see a fair amount of volatility in the coming days and weeks unless Westminster’s response to this surprise result is remarkably smooth, which is unlikely. History tells us that hung parliaments are not durable, let alone with Brexit looming large,” O’Carroll said.
The results sent the British pound spiraling lower to its weakest level since April 18 against the dollar. As of 11:09 a.m. in New York, sterling traded off those lows but was still down 1.66 percent at $1.2733.
European equities seemingly shrugged off the result, however. The FTSE 100 rose 0.9 percent, while the German Dax advanced 0.7 percent. The pan-European Stoxx 600 index gained 0.24 percent.
“What is possibly most distressing about the vote outcome is not just the difficulty Theresa May now has in governing, both Brexit and the country itself, it was the belief in the Labour leader Jeremy Corbyn and their party who might as well be Bernie Sanders’ twin brother in his thoughts,” said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
U.S. stock futures traded mostly higher on Friday, however, with Dow, S&P and Nasdaq futures advancing 34, 3 and 4 points, respectively.
Investors also remained undeterred by former FBI Director James Comey’s testimony on Thursday, which some saw as lacking a “smoking gun” that could derail Donald Trump’s presidency.
Cornernstone’s Zaccarelli said that, while the testimony was “very unflattering” to Trump, it is unlikely to lead to an impeachment.