The S&P 500 and Nasdaq rose Thursday, extending Wall Street’s rally in the wake of President-elect Donald Trump’s victory, as traders weighed the Federal Reserve’s latest rate cut.
The S&P500 gained 0.74% to close at a record high of 5,973.10. The Nasdaq Composite advanced 1.51% to reach 19,269.46 – the first close above 19,000. The Dow Jones Industrial Average was little changed, falling less than one point to 43,729.34. All three indices hit record intraday highs during the session.
The moves built on a increase in shares Wednesday after Trump’s victory, which saw a 1,500-point gain for the Dow. The S&P 500 rose 2.53% on the best post-election day in history.
The bond market has also been volatile since the election, with Treasury yields falling on Thursday after spiking the previous session.
Those big swings provided the backdrop for the Federal Reserve’s interest rate reduction Thursday afternoon. The central bank’s quarter-point cut was widely expected, but the move was smaller than the half-point cut in September.
Fed Chairman Jerome Powell said the central bank had a “good feeling” about the state of the economy, and that the Fed would likely stick with small steps going forward.
“The balance of risk gives the Fed plenty of room to cut the fed funds rate well into 2025. Markets shouldn’t expect super-large rate cuts unless the economy turns south and (that) doesn’t seem likely at all for a while,” Jamie said. Cox, managing partner of Harris Financial Group.
Wall Street generally expects the second Trump administration to be good for risk assets like stocks, thanks in part to his proposed tax cuts. However, the prospect of continued large government deficits and higher rates has raised some concerns about a rebound in inflation.
Until the scale and impact of Trump’s plans become clear, investors can expect volatile trading and a stock market moving generally higher, said Tony Roth, CIO at Wilmington Trust.
“At some point, given high equity prices and higher income levels from bonds, we could have a highly compressed equity risk premium and little equity market opportunity. We’re not there yet. I think we have six months before we have to have a serious conversation about our presence,” Roth said.
Big Tech stocks moved higher Thursday to bolster the market Apple And Nvidia an increase of 2.1% and 2.3% respectively. Metaplatforms rose by 3.4%.
Financial stocks, which rose sharply on Wednesday, gave back some of those gains on Thursday. Shares of JPMorgan Chase fell by 4.3% and American Express fell 2.8%, putting pressure on the Dow Jones.