Wall Street/ stock market/ Federal Reserve/ interest rate decision/ Donald Trump/ inflation/ economy/ Nasdaq/ S&P 500/ Dow Jones/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stocks saw mixed performance Thursday morning as investors awaited the Federal Reserve’s interest rate decision. The S&P 500 rose slightly, the Dow edged lower, and the Nasdaq gained as markets assessed potential impacts from Donald Trump’s election win and upcoming Fed policy shifts. With inflation near the Fed’s target, a second rate cut is widely expected, though Trump’s proposed tariffs and economic policies add new uncertainties.
“Wall Street Prepares for Fed Rate Decision Quick Looks”
- Mixed Market Performance: The S&P 500 saw a 0.4% gain, while the Dow dipped slightly, and the Nasdaq rose as traders awaited the Fed’s rate decision.
- Fed Rate Cut Expected: The Federal Reserve is expected to announce a second consecutive rate cut, responding to a slowing job market and steady inflation.
- Trump’s Economic Policies in Focus: With Trump’s election, investors anticipate inflationary pressure from his proposed tariffs and economic growth policies.
- Corporate Earnings Move Stocks: McKesson shares surged after strong earnings, while Match Group tumbled due to underwhelming Tinder performance.
- Global Markets Mixed: London held steady following a Bank of England rate cut, while Asia saw varied responses to Trump’s tariff threats.
Wall Street Remains Mixed Ahead of Fed Rate Decision
Deep Look
U.S. stocks showed mixed movement on Thursday morning as investors kept an eye on the Federal Reserve’s upcoming decision on interest rates. In early trading, the S&P 500 gained 0.4%, building slightly on Wednesday’s post-election rally, while the Dow Jones Industrial Average fell by 62 points, or 0.1%, and the Nasdaq Composite climbed 0.7%. The market’s momentum has slowed as investors weigh the implications of Donald Trump’s presidential win and the Fed’s anticipated shift in policy direction.
The highlight of Thursday’s trading session is expected to come in the afternoon when the Federal Reserve announces its decision on whether to cut its main interest rate for a second time this year. A majority of analysts anticipate that the Fed will reduce rates to support the job market, now that inflation is nearing the Fed’s long-term target of 2%. In September, the Fed initiated this rate-cutting cycle, shifting its focus from combating inflation to bolstering employment as inflation has begun to moderate.
Thursday’s economic data was mixed but largely aligned with expectations. Initial claims for U.S. unemployment benefits rose slightly, indicating a marginal increase in layoffs. Additionally, a report on U.S. worker productivity showed modest improvement over the summer, which could help maintain control over inflation. However, productivity gains were slightly below economists’ forecasts, reflecting the challenges of balancing economic growth and inflation control.
Trump’s unexpected election win has added complexity to the Fed’s strategy, as many of his proposed policies—such as broad tariffs on imports and reduced regulation—are expected to drive both economic growth and inflation. The potential inflationary effects of Trump’s policies have led traders to adjust their forecasts for future Fed rate cuts. Previously, the expectation of sustained rate cuts helped drive the S&P 500 to record highs throughout the year. Now, with Trump in office, investors are less certain about how many cuts the Fed will implement in 2025.
On the corporate front, strong earnings reports led to some significant stock movements. McKesson, a healthcare services company, jumped 8.1% after exceeding profit forecasts, fueled by robust growth in its pharmaceutical business division. The company also raised its profit outlook for the current fiscal year, boosting investor confidence.
Among tech stocks, Lyft shares surged 28.4% following a quarterly earnings report that beat analysts’ expectations for revenue and profit. Qualcomm also saw a 2.8% increase, driven by strong quarterly results, while Arm Holdings reported better-than-expected earnings but gave disappointing guidance, leading to a 1% drop in its stock.
Conversely, Match Group shares plummeted 18% after the company fell short of revenue targets due to weaker-than-expected performance from its flagship app, Tinder.
Globally, market reactions were varied as investors assessed the impact of potential trade policies under Trump’s new administration. In London, the FTSE 100 remained mostly flat after the Bank of England cut its interest rate by a quarter of a percentage point. In Asia, Japan’s Nikkei 225 fell 0.3% on renewed concerns that Trump’s presidency might revive trade tensions, potentially leading to further tariffs. “I think everybody’s going to be worried about Trump’s tariffs because that’s one of the things in his playbook. And so we’ll have to see how things develop in the early stages of his presidency this time,” noted Neil Newman, head of strategy at Astris Advisory Japan.
However, in China, markets showed optimism as the government reported a surge in exports in October, which grew at their fastest pace in over two years. Both the Hong Kong and Shanghai stock exchanges saw rallies, with gains of 2% and 2.6%, respectively. While Trump has proposed a sweeping 60% tariff on all Chinese imports—with plans for further increases should tensions escalate over Taiwan—analysts believe the impact may not be immediate. “We expect shipments to stay strong in the coming months—any drag from potential Trump tariffs may not materialize until the second half of next year,” said Zichun Huang of Capital Economics.
In the bond market, the yield on the 10-year Treasury fell slightly to 4.37% from 4.44% the day before. This decrease came after a notable surge fueled by expectations that Trump’s tax, tariff, and deregulation policies could accelerate U.S. economic growth and raise inflation. Some sectors that had surged on Wednesday, such as banking stocks, lost some momentum as the day progressed.
Meanwhile, Trump Media & Technology Group, a company closely tied to the president-elect, saw a significant 14.7% decline, marking a pullback after previous gains.
As investors await the Fed’s decision, the mixed performance on Wall Street reflects broader uncertainties regarding how Trump’s presidency and the Fed’s policy adjustments will shape the economy in the coming months.
