Stock Market Recap: Wall Street Drifts as Post-Election Rally Cools
Market Performance: Major Indexes Show Mixed Results
On Thursday, November 14, 2024, the U.S. stock market showed signs of cooling off after the recent post-election rally. As of midday trading, the major indexes were displaying mixed results:
– The S&P 500 was down 0.1%, but still hovering near its all-time high set on Monday.
– The Dow Jones Industrial Average dipped slightly, down 15 points or less than 0.1%.
– The Nasdaq Composite experienced a modest decline of 0.2%.
Why Was the Market Up Earlier This Week?
The market’s recent surge can be attributed to the aftermath of Donald Trump’s election victory. However, the momentum appears to be slowing as investors reassess the implications of the new administration’s policies. Economists suggest that Trump’s preferences for lower tax rates, higher tariffs, and less regulation could lead to:
1. Higher U.S. government debt
2. Increased inflation
3. Faster economic growth
These factors are causing traders to recalibrate their expectations for future Federal Reserve actions.
Federal Reserve and Interest Rate Outlook
The Federal Reserve began cutting rates from their two-decade high in September, aiming to support the job market while keeping inflation in check. However, Trump’s victory may have altered the landscape:
– Treasury yields initially jumped but later eased, with the 10-year Treasury yield settling at 4.41%.
– Traders are now pricing in an 82.3% chance of a 25-basis point interest rate cut at the Fed’s December meeting.
– Fed Chair Jerome Powell is scheduled to provide an economic outlook update to business leaders in Dallas later today.
Major Stock Movements and Corporate News
Several companies made headlines with significant stock price movements:
1. Walt Disney Co. (DIS): Shares jumped 7.8% after reporting stronger-than-expected quarterly profits, driven by improved streaming business performance and strong box office results.
2. Tapestry: The luxury fashion company saw its shares surge 12.7% after announcing the termination of its merger with Capri.
3. Cisco Systems (CSCO): Despite reporting stronger profits, Cisco’s stock dropped 2.3%, possibly due to lower-than-expected financial forecasts.
4. Super Micro Computer: A major beneficiary of the AI boom, fell 7.4% after announcing a delay in filing its quarterly financial statements.
5. Cryptocurrency-related companies: Firms like Coinbase Global (COIN), MARA Holdings (MARA), and MicroStrategy (MSTR) saw gains as Bitcoin continued to climb on hopes of favorable policies under the Trump administration.
Upcoming Market Events and Economic Indicators
Investors are closely watching several key events and economic indicators:
1. Producer Price Index (PPI) for October, expected to be released at 8:30 a.m. ET.
2. Weekly jobless claims data, also due at 8:30 a.m. ET.
3. Earnings reports from Walt Disney and Applied Materials before the market opens.
4. Speeches from Fed officials Adriana Kugler, Thomas Barkin, and John Williams later in the day.
Global Market Overview
The impact of U.S. market trends is reverberating across global markets:
– European indexes showed strength, with Germany’s DAX jumping 1.3%.
– Asian markets were mixed, with Hong Kong’s Hang Seng dropping 2%, while South Korea’s Kospi added 0.1%.
Looking Ahead: Market Expectations
As the post-election rally shows signs of fatigue, investors are recalibrating their strategies. The market is likely to remain sensitive to:
1. Upcoming economic data releases
2. Federal Reserve policy signals
3. Developments in the Trump administration’s economic plans
Traders and analysts will be closely monitoring these factors to gauge the market’s direction in the coming weeks. The interplay between potential inflationary pressures and the Federal Reserve’s response will be crucial in shaping market sentiment and performance.
In conclusion, while the stock market’s post-election enthusiasm may be waning, the underlying economic factors and policy shifts continue to provide a dynamic and closely-watched trading environment. Investors should stay tuned to upcoming economic indicators and Federal Reserve communications for further guidance on market trends.
