Stock Market Today: Stocks pause post-Trump rally amid best week of 2024

08 Nov 2024, 11:05 by Martin Baccardax · The Fresno Bee

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U.S. equity futures edged lower in early Friday trading, but are still on pace for their best week of the year, as investors digest the impact of a stunning election win for former President Donald Trump and a Federal Reserve rate cut that could be the last of the year.

Stocks ended firmly higher on Thursday, with the S&P 500 testing the 6,000 point mark by the close of trading and extending its five-day gain to around 4.7%, powered in part by the ongoing "Trump Trade" euphoria in domestic markets and the Fed's decision to lower its benchmark lending rate for a second consecutive meeting.

The Nikkei 225 ended 1.5% higher thanks in part to the ongoing rally in megacap tech stocks while the Dow Jones Industrial Average gave back a point from its previous record high close.

Markets are still working through the implications of a new Trump administration, particularly where it comes to trade policy, government borrowing and deregulation, all of which will have significant impact on asset prices, and broader economic growth, over the coming year.

Fed Chair Jerome Powell told reporters in Washington that Tuesday's election would have "no effects on our policy decisions" over the near-term.Tom Williams/Getty Images Tom WilliamsGetty Images/Stacker

With that uncertainty hanging over Fed policy, Chairman Jerome attempted to delicately manage expectations of a December rate cut, insisting that the election will have "no effects on our policy decisions" over the near-term, but nonetheless removed a phrase from the central bank's statement about confidence in slowing inflation.

Traders are still put the odds of a December reduction at 71%, according to the CME Group's FedWatch, but new growth and inflation forecasts from the Fed's final meeting of the year could alter the path for rates into 2025.

"We think [Thursday's] cut was quite appropriate, as would be another one in December, but clearly the crystal ball on interest rates has become cloudier recently," said Rick Rieder, BlackRock's chief investment office for global fixed income. "Will the Fed continue cut alongside its previously outlined SEP projections? It is clearly a question today."

"Yet, we do think that assuming aggressive rate cuts from here into 2025 would be overzealous," he added.

Bond markets mellowed somewhat in the wake of Powell's statement, with benchmark 10-year Treasury yields retracing from their early-week highs to around 4.297% in overnight trading and the MOVE index of market volatility now down 23% over the past five days.

That's setting up Wall Street for a benign Friday open, with futures contracts tied to the S&P 500 suggesting a 10 point opening bell decline and the Dow Jones Industrial Average for a modest 35 point pullback.

The tech-focused Nasdaq, meanwhile, is called 82 points lower, with Nvidia (NVDA) , Tesla (TSLA) and Intel (INTC) all active in premarket trading.

In overseas markets, Europe's Stoxx 600 was marked 0.73% lower following a weaker-than-expected stimulus package from China and the ongoing drama in Germany's Bundestag that could lead to fresh national elections early next year.

Britain's FTSE 100, meanwhile, fell 0.85% following on from yesterday's Bank of England rate cut that warned of dislocation for global trade markets, as well as elevated inflation, follow this week's U.S. elections.

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Overnight in Asia, China's National People's Congress ended its four-day meeting with the unveiling of a plan to refinance around $1.4 trillion in local government debt, a move that disappointed markets looking for deeper stimulus in the world's second-largest economy.

China stocks fell firmly across the board, with the benchmark CSI 300 down 1% on the session, while the regional MSCI ex-Japan benchmark slipped 0.01% into the close of trading.

Japan's Nikkei 225, meanwhile, fell 0.69% on the session, but held to a 3.8% gain for the week .

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This story was originally published November 8, 2024, 3:05 AM.