Stock Market Recap: Major Indexes Hit Record Highs Amid Post-Election Rally
Market Performance: S&P 500, Nasdaq, and Dow Jones Reach New Milestones
On Tuesday, November 12, 2024, the U.S. stock market continued its impressive post-election rally, with all three major indexes closing at record highs. The Dow Jones Industrial Average (DJI) led the charge, rising 0.7% or 304.14 points to close at 44,293.13, marking its first-ever close above the key 44,000 level. During intraday trading, the blue-chip index touched an all-time high of 44,486.70.
The S&P 500 (^GSPC) gained 0.1% to finish at 6,001.35, breaking through the psychological barrier of 6,000 for the first time in history. The index reached an intraday high of 6,017.31. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) also set a new record, closing at 19,298.76, up 0.1%, after touching an intraday high of 19,366.07.
Why Was the Market Up Today?
Several factors contributed to today’s market gains:
1. Post-Election Optimism: Investors remained bullish on President-elect Donald Trump’s protectionist policies, which are expected to benefit the U.S. economy.
2. Federal Reserve Rate Cuts: Recent interest rate cuts by the Fed have boosted confidence in risky assets like equities. The Fed fund rate is currently in the range of 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. GDP grew at 1.6%, 3%, and 2.8% in the first three quarters of 2024, respectively. The Atlanta Fed GDPNow tracker estimates a 2.5% growth for the fourth quarter.
4. Positive Earnings Reports: As of November 8, 452 S&P 500 companies have reported their quarterly financial numbers, with total earnings up 7.1% year-over-year on 5.5% higher revenues.
Sector Performance and Notable Stocks
The market rally was broad-based, with six out of eleven sectors in the S&P 500 ending in positive territory. The Consumer Discretionary Select Sector SPDR (XLY) and Financials Select Sector SPDR (XLF) were the top performers, advancing 2% and 1.4%, respectively. However, the Real Estate Select Sector SPDR (XLRE) experienced a 0.9% drop.
Notable stock movements included:
– Tesla Inc. (TSLA): The electric vehicle manufacturer saw its stock price jump 9%, contributing significantly to the Nasdaq’s gains.
– Shopify (SHOP): The e-commerce platform surged after exceeding quarterly revenue estimates and raising its holiday sales forecast.
– Home Depot (HD): The home improvement retailer raised its annual outlook, citing strong demand from contractors despite broader consumer spending pullbacks.
Upcoming Market Events and Economic Data
Investors are closely watching several upcoming events that could impact market performance:
1. Inflation Expectations: The New York Fed’s one-year inflation expectations report for October is due to be released.
2. Earnings Reports: Several major companies are set to report earnings, including Cava (CAVA), Hertz (HTZ), Instacart (CART), Novavax (NVAX), Occidental Petroleum (OXY), and Spotify (SPOT).
3. Potential December Rate Cut: The CME FedWatch tool indicates a 70% probability of another 25 basis-point rate cut in December.
Market Outlook and Potential Risks
While the market sentiment remains largely positive, some analysts are cautioning about potential risks:
1. Overvaluation Concerns: Wall Street analysts suggest that the post-election surge in stocks could soon lose steam, with major gauges at record highs.
2. Profit-Taking: Bank of America reports that investors have raised their exposure to U.S. stocks to an 11-year high, which could set the stage for profit-taking.
3. Policy Uncertainty: The market is still assessing the potential impact of President-elect Trump’s cabinet picks and economic policies, particularly regarding tariffs and corporate taxes.
4. Yield Pressures: The 10-year Treasury yield added about 8 basis points to 4.39%, which could potentially dampen enthusiasm for equities.
As the market continues to navigate post-election dynamics and economic uncertainties, investors should remain vigilant and diversified in their approach. The current rally, while impressive, may face challenges as policy details emerge and economic realities set in.
