Wall Street/ Trump trade/ U.S. stocks/ Bitcoin record/ Treasury yields/ S&P 500/ Dow Jones/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stocks saw modest shifts as the “Trump trade” rally lost some momentum, with the S&P 500 and Dow making small gains while smaller stocks and Tesla fell. Rising Treasury yields and a Bitcoin rally also drew investor focus, as economic resilience and Trump’s policy expectations continue to influence the market.
Wall Street and ‘Trump Trade’ Cooling: Quick Looks
- Market Overview: S&P 500 up 0.1%, Dow rises 70 points, Nasdaq steady.
- Small-Cap Losses: Russell 2000 index of smaller companies slipped 0.4%.
- Crypto Surge: Bitcoin soared to near $90,000, driven by pro-crypto policies.
- Corporate Earnings: Live Nation, Tyson Foods exceed expectations; Home Depot edges up.
- Bond Market: Treasury yields rise, 10-year yield reaches 4.38%.
Wall Street Drifts as ‘Trump Trade’ Momentum Cools
Deep Look
Wall Street saw a slight dip in momentum on Tuesday as the post-election “Trump trade” rally began to ease, following last week’s surge after Donald Trump’s presidential win. Major indexes saw modest changes, with the S&P 500 up 0.1% and the Dow Jones Industrial Average gaining 70 points, or 0.2%, in early trading. The Nasdaq composite remained mostly flat, reflecting cautious trading as investors gauge the longer-term impact of Trump’s economic policies.
Investors initially drove stock prices higher on expectations that Trump’s second term will bring pro-business policies such as tax cuts, deregulation, and increased infrastructure spending, which could boost economic growth and potentially lead to higher inflation and larger U.S. government debt. However, some areas of the market that saw significant gains last week began to cool on Tuesday, particularly small-cap stocks and Tesla, with the Russell 2000 index of smaller companies slipping 0.4%.
Tesla, led by Elon Musk, a prominent Trump ally, fell 2.4% as it marked its first loss since Election Day, suggesting that investor enthusiasm for high-growth stocks may be settling. Additionally, Trump Media & Technology Group, a stock closely associated with Trump’s popularity, dropped by 6.6%.
Positive Corporate Earnings Boost Some Stocks
Despite the pullback in some areas, a few stocks rose due to stronger-than-expected earnings reports. Live Nation Entertainment, the parent company of Ticketmaster, saw a 4.7% increase in its stock price as it reported higher profits for the summer. The company highlighted increased global spending on concerts and hinted at strong early sales projections for 2025 tours by major acts like Coldplay.
Tyson Foods also posted better-than-expected profits, pushing its stock up 8.1%. The meat producer, known for its beef, chicken, and pork products, additionally raised its dividend, providing a boost to investor confidence. Home Depot, despite facing a decline in consumer spending, posted profits that exceeded Wall Street expectations, leading to a modest 0.3% rise in its stock.
Bitcoin Hits Record Levels Amid Trump’s Crypto Support
Bitcoin surged to a record high, reaching $89,995 before settling around $85,000, as Trump’s endorsement of cryptocurrency bolstered investor interest. Trump has pledged to turn the U.S. into a crypto-friendly nation, attracting further attention from crypto enthusiasts. Bitcoin’s impressive rise is part of a broader trend in the cryptocurrency market as new investors and institutional interest continue to fuel growth.
Bond Market Rally as Treasury Yields Rise
In the bond market, U.S. Treasury yields increased, with the 10-year yield climbing to 4.38% from 4.31% late last Friday. This rally reflects the U.S. economy’s resilience, as robust economic data has kept recession fears at bay. Investors are hopeful that the economy can maintain stability as the Federal Reserve implements additional interest rate cuts to sustain employment and move inflation closer to its 2% target.
Trump’s economic policies are also likely contributing to this rise in yields. His support for tariffs and other protectionist measures, which analysts believe could boost inflation, is prompting traders to scale back on expected Fed rate cuts next year. While lower interest rates can stimulate economic growth, they can also increase inflationary pressures.
Global Markets and Asia’s Decline
Internationally, stocks fell across Europe and Asia, reflecting global uncertainty around economic policy and market volatility. Hong Kong’s Hang Seng index dropped by 2.8%, marking one of the largest declines in the region. The index closed below the 20,000 mark for the first time since China’s economic stimulus announcement in September, highlighting concerns over the effectiveness of the measures in the current economic climate.
Conclusion
Tuesday’s market activity underscores a slight cooling of the “Trump trade” rally that swept Wall Street following the election. While investors are still optimistic about Trump’s potential pro-growth policies, market volatility and policy uncertainty are keeping gains in check. As markets digest new earnings reports, economic indicators, and policy shifts, investors may continue to see a mix of cautious optimism and strategic repositioning in the days ahead.
