Market Optimism Soars as Trump Secures Second Term
As the dust settles on Donald Trump’s surprise re-election, US stock futures are riding high ahead of the Federal Reserve’s interest-rate decision. With traders largely pricing in a 25-basis point rate cut, attention turns to the central bank’s policy statement for hints on the future path of monetary easing.
Investors Take a Breath
According to Russ Mould, investment director at AJ Bell, “futures prices suggest a quieter day on the US markets, with some gains still expected.” Investors may be taking stock of recent events, waiting to see the scale of the Fed’s rate cut. The previous session saw all three major indexes reach record highs, driven by expectations of Trump’s pro-business policies, including lower corporate taxes and deregulation.
Indexes Reach New Heights
The Dow, S&P 500, and small-cap Russell 2000 notched their biggest one-day rise since November 2022, while the Nasdaq enjoyed its best day since February. As of 5:08 a.m. ET, Dow E-minis were up 82 points (0.18%), with U.S. S&P 500 E-minis rising 11.5 points (0.19%) and Nasdaq 100 E-minis up 49 points (0.23%). Futures tracking the small-cap index were up 0.3%, nearing a three-year high.
Fed Rate Cut Expectations
Traders are betting on two policy rate cuts in 2025, despite robust economic data and potential inflation risks from Trump’s proposed tariffs and government spending. The focus is also on whether Republicans will retain control of the U.S. House of Representatives, which would facilitate the implementation of Trump’s policies.
Rate-Sensitive Stocks Under Pressure
Treasury yields have surged following Trump’s election, putting pressure on rate-sensitive equities. Some stocks that rallied after his win are giving back gains, with Trump Media & Technology down 9.5% and Tesla edging 0.7% lower after a nearly 15% gain on Wednesday. Qualcomm shares, however, jumped 7.9% after the chipmaker forecast strong current-quarter sales and profit.
VIX Hits Six-Week Low
The VIX, Wall Street’s “fear gauge,” has fallen to a six-week low. Weekly initial jobless claims data is due at 8:30 a.m. ET, providing further insight into the state of the US economy.
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