Market Optimism Remains Strong Despite China’s Underwhelming Stimulus
US stocks continued to hover near record highs on Friday, driven by optimism surrounding President-elect Donald Trump’s economic policies. The S&P 500 rose 0.3%, while the Dow Jones Industrial Average gained 0.6%. However, the Nasdaq Composite lagged behind, dropping below the flat line as the initial “Trump trade” euphoria began to wear off.
Wall Street Questions Trump’s Ambitious Policies
As investors begin to question whether Trump will be able to push through his ambitious policies, the dollar and Treasury yields have given up some of their post-election gains. Additionally, China’s latest fiscal stimulus plan, worth $1.4 trillion, failed to impress investors, leading to pressure on oil prices, the yuan, and local stocks.
Corporate Earnings: Sony and Paramount Shine
On the corporate front, Sony shares surged in premarket trading after the company reported a 73% jump in quarterly profit. Meanwhile, Paramount Global reported improved earnings in its streaming business, ahead of its planned combination with Skydance Media.
Consumer Sentiment Improves
According to the University of Michigan’s latest consumer sentiment survey, Americans are feeling increasingly optimistic about the short-term path for inflation. Consumers expect inflation to sit at 2.6% in a year, a decrease from last month’s expectation of 2.7%. The overall consumer sentiment index rose to a reading of 73, up from 71 in October.
Nvidia Replaces Intel in Dow 30
In a significant move, AI chip heavyweight Nvidia replaced semiconductor giant Intel as one of the Dow’s 30 components. This change is expected to give the blue-chip index an added boost, as Nvidia’s shares have risen over 200% year-to-date, while Intel’s shares have fallen roughly 45%.
Key Market Themes
As we move forward, key market themes include China’s underwhelming stimulus, Paramount’s mixed earnings, and Nvidia’s record-breaking market cap. Additionally, investors are pulling back on Trump trades, uncertain about his tariff plans.
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