Stock market recovers from an initial sell-off

After a sharp sell-off overnight in Asia, markets staged a recovery on Wednesday as investors shook off the shock of a Donald Trump presidency and began to focus on whether his mix of policies could spur a still-fragile global economic recovery.

Futures for the Standard & Poor’s 500 stock index initially plunged 5 percent but recouped nearly all their losses when stocks started trading in the United States. The major market indicators ended the day up more than 1 percent.

By their nature, markets are wired to look beyond the moment and into the future. In that regard, the bounce-back in stocks reflects the bet being made by many investors that Trump’s promises to increase government spending, cut taxes and ease financial regulations will outweigh his strident antitrade rhetoric.

To that end, stocks that would benefit from more robust economic growth, like banks and companies tied to infrastructure and transportation, were in demand.

More broadly, however, market experts said that Trump’s victory should be viewed as a loud signal from Main Street that the time had come for fiscal policy in the form of increased government spending to replace central bank activism as a means to stimulate economic growth.

“This was a political uprising,” said Jurrien Timmer, a market strategist at the mutual fund giant Fidelity Investments in Boston. “Monetary policy has been part of the problem, in that the wealth effect has not accrued equally. If the baton is passed toward fiscal policy, that would mean higher inflation and lead to a rotation toward cyclical stocks such as financials.”

For quite some time now, economists have been warning that the reliance of governments in the United States and elsewhere on central banks to energize economies via zero interest-rate policies and buying back securities was creating an uneven recovery by bolstering the housing markets in New York, London and San Francisco while real economies lagged.

“The economic recovery under President Obama never reached deep enough — it did not bring working-class people up,” said Justin Gest, a public policy expert who has just written a book analyzing how working-class men and women in the United States and Britain have become alienated.

Increased government spending on highways, bridges and roads may well provide a lift to the broader economy, and tax cuts and looser regulations will be cheered by the financial markets.

But there are downsides to these approaches, including increased deficits and levels of debt.