Slight gains in the stock market as Wall Street`s motive is to enlarge its postelection rally
The United States stocks have experienced a minimal gain after the S&P 500 and NASDAQ composite indices made their all-time high record in a rally after the recent election result. This rise in stocks indicates the investor’s optimism, partially due to the Federal Reserve`s present decision regarding the interest rate cut decision. It is seen that declining rates often make the borrowing cost cheaper, which fuels investment and spending. Investors are now figuring out how this drop in interest rates will support economic growth, impacting their decisions regarding the stock market.
Market indices such as S&P 500 and Dow Jones Industrial Average futures have witnessed a minimal rise of quite less than 0.1 %; on the other hand, the NASDAQ composite index has experienced a rise of 0.14 %. On Thursday, S&P 500 closed its trading session with a new record high of 0.7 %, and tech-based NASDAQ gained 15.5 %, closing high above the 19000 mark for the first time. The Dow Jones closes slightly lower, while all three major indices of the market hit their high record at some point in the session, which indicates the strong investor interest regarding technology-based stocks.
The extended rally of market gains has started after Donald Trump`s return to the U.S. presidency on Wednesday. The Dow Jones and the S&P 500 have experienced their all-time strong performance since November 2022. This rally indicates optimism about the potential of the policies that are yet to come under the newly formed administration. while the investors are currently expecting economic growth and business-oriented policies that might be beneficial for the stock market.
With the matching expectations of the market, the Federal Reserve has reduced their interest rates by 25 basis points, which is around 0.25 %, while the Chairman of the Federal Reserve, Mr. Jerome Powell, indicates sanguinity regarding the current economy. Additionally, Global X ETFs head of investment strategist Mr. Scott Helfstein also stated that the possibilities for the future rate cut by the Federal Reserve are very low at this moment after the election, while he also cautioned that the Fed`s approach is now going to become unpredictable in the coming months.
Recently, investors have indicated that the newly elected Republican government is quite beneficial for the United States stock market, with expected policies regarding deregulation, tax rate cuts, and a friendly environment for mergers and acquisitions. These current changes might be able to boost the corporate sector and economic growth. Currently, there is a rising chance of high tariff rates and growing concerns regarding the rising federal deficit, which might fuel inflation upward. So, the rising consumer prices could lead to higher costs for businesses, and it might force the Federal Reserve to increase the rate of interest, which will lead to an economic slowdown.
The current market looks positive, as there is an anticipation that the newly elected Trump administration could boost the economy and fuel up the valuation of the highly riskier stocks. It is seen that faster growth with a combination of new tariff rates could boost inflation by increasing consumer prices. Presently, the risks are balanced between the stable and maximising employment stated by the Federal Reserve. However, the Federal Reserve might take quick actions if the inflation begins to rise too fast; the actions might contain an increase in interest rates, and this might influence the economic outlook negatively.
The post-election data reveals that the major three indices are on the rise. It is noted that after Thursday`s session, the S&P 500 witnessed a gain of 4.3 % and the Dow Jones ended with a rise of 4 per cent; both indices were on a single-week rise since November 2023. The NASDAQ showed an even better growth rate with 5.6 % during the ending phase of the session, showing a strong performance in technology-based stocks. Tech stocks are the primary game changers of the market, and this shows the positive mindset of the investors after the election results.
In the end, it is seen that Airbnb shares fell by around 3 % after the third quarter earnings of around 2.13 dollars per share, which is nearly below expectations with revenue of around 3.73 billion, beating forecasts. Akamai Technologies has experienced a decline of 6 % in the stock valuation after the disappointing year; the expectations are falling short. Also, Block`s shares declined by 2 % as the revenue missed in Q3 of 5.98 billion dollars at an expectation of 6.24 billion dollars; additionally, the adjusted earnings of 88 % just exceeded expectations by 1 %.
