Stock Market Recap: Why Was the Market Up Today? – November 12, 2024
Major Indexes Continue Post-Election Rally
The U.S. stock market maintained its upward momentum on Tuesday, November 12, 2024, as investors remained optimistic about the post-election landscape and recent Federal Reserve decisions. The Dow Jones Industrial Average (DJI) led the gains, rising 0.7% or 304.14 points to close at a historic 44,293.13, marking its first-ever finish above the 44,000 level .
The S&P 500 (^GSPC) also reached a significant milestone, gaining 0.1% to end the day at 6,001.35, surpassing the 6,000 mark for the first time . Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) finished at a record high of 19,298.76, inching up 0.1% .
Key Factors Driving Market Performance
Several factors contributed to the day’s positive market performance:
1. Post-Election Optimism: The market continued to react favorably to the re-election of President Donald Trump, with investors anticipating pro-business policies and potential protectionist measures that could benefit U.S. industries .
2. Federal Reserve Policy: Recent interest rate cuts by the Fed have boosted investor confidence in risky assets like equities. The current fed funds rate stands at 4.50-4.75%, down from a 23-year high of 5.25-5.5% in mid-September .
3. Strong Economic Fundamentals: The U.S. economy has shown robust growth, with GDP expanding at 1.6%, 3%, and 2.8% in the first three quarters of 2024, respectively .
4. Positive Earnings Reports: As of November 8, 452 S&P 500 companies had reported quarterly earnings, with total earnings up 7.1% year-over-year on 5.5% higher revenues .
Sector Performance and Notable Stocks
The day’s trading saw mixed performance across sectors:
– Consumer Discretionary (XLY) and Financials (XLF) sectors led the gains, advancing 2% and 1.4%, respectively .
– The Real Estate sector (XLRE) experienced a slight decline, dropping 0.9% .
Among individual stocks, Tesla Inc. (TSLA) was a standout performer, with its stock price jumping 9% . The electric vehicle manufacturer continues to benefit from its strong market position and investor enthusiasm.
Upcoming Market Events and Potential Impacts
Investors should keep an eye on several upcoming events that could influence market direction:
1. December Fed Meeting: Market participants are pricing in a 70% probability of another 25 basis-point rate cut in December, according to the CME FedWatch tool .
2. Cabinet Appointments: President-elect Trump’s cabinet picks, including Florida Sen. Marco Rubio as potential Secretary of State, may signal a tougher stance on China, which could impact trade relations and market sentiment .
3. Earnings Reports: Continued focus on quarterly earnings reports from major companies will provide insights into corporate health and economic conditions.
Market Outlook and Investor Sentiment
While the market rally has been impressive, some analysts are cautioning about potential overextension:
– Bank of America reports that investor exposure to U.S. stocks is at an 11-year high .
– Citi strategists suggest that bullish bets may set the stage for profit-taking in the near term .
The CBOE Volatility Index (VIX), often referred to as the fear gauge, decreased slightly by 0.2% to 14.97, indicating relatively low market anxiety .
As the market digests recent gains and anticipates future policy developments, investors should remain vigilant and diversified in their approach to capitalize on opportunities while managing potential risks in this dynamic economic environment.
