Market Rally Continues as Investors Digest Fed Rate Cut and Trump’s Election Win
The US stock market extended its gains on Thursday, with investors digesting the Federal Reserve’s decision to cut interest rates by 25 basis points and Donald Trump’s presidential election victory. The S&P 500 rose roughly 0.6%, while the tech-heavy Nasdaq Composite moved up more than 1.3%.
Fed’s Rate Cut Decision
In a widely expected move, the Fed cut interest rates to a range of 4.5% to 4.75%, citing support for its goals to maintain stable prices and full employment. However, the central bank removed language from its policy statement that suggested inflation was moving sustainably towards 2%, raising questions about the pace and number of future rate cuts.
Trump’s Election Win Boosts Stocks
Trump’s presidential election victory sent all three major stock gauges soaring to fresh record highs on Wednesday. His plans for corporate tax cuts and deregulation have fueled optimism for a boost to the economy that will feed into stocks.
Tech Stocks Lead the Way
Big tech led the market action, with all of the “Magnificent Seven” tech stocks up more than 1% on the day. Chip heavyweight Nvidia and e-commerce giant shares rose to new highs, while Meta shares popped more than 3%.
Bonds and Yields
A recent move higher in yields took a breather, with the 10-year Treasury yield falling about 7 basis points to 4.35%. This move could signal a shift in investor sentiment towards riskier assets.
Corporate Earnings
Several companies reported earnings on Thursday, including Arm Holdings, Qualcomm, and Warner Bros. Discovery. While some companies beat expectations, others disappointed, leading to mixed reactions in the market.
Mortgage Rates Rise
Mortgage rates rose for a sixth consecutive week, following Treasury yields as they climbed higher through the presidential election. The average 30-year fixed-rate mortgage rose to 6.79%, up from 6.72% a week earlier.
CEO Insights
American CEOs are already weighing in on how Trump’s policies could impact their business. Some expect increased tariffs to weigh on retailers, while others see opportunities for consolidation in the media industry.
Bitcoin and Crypto
Bitcoin briefly touched new highs just north of $76,000, extending gains from Wednesday’s monster rally following Trump’s White House win. Crypto-related stocks also rose, with shares of AI chip heavyweight Nvidia and e-commerce giant Amazon each gaining more than 1%.
Economic Data
Initial jobless claims jumped to 221,000 last week, an increase of 3,000 from the previous week’s revised level. Meanwhile, continuing claims came in at 1,892,000, an increase of 39,000 from the previous week’s revised level.
Market Themes
The Federal Reserve’s interest rate decision, economic data, and corporate earnings will continue to shape market themes in the coming days. As investors adjust to Trump’s coming return to the White House, market volatility is likely to remain high.
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