Weekly Market Recap: Equities Surge Amid Election and Fed Rate Cut
Market Overview
U.S. equities rebounded last week with the S&P 500 gaining 4.7%, the Nasdaq rising 5.8%, and the Dow closing 4.6% higher amid the Presidential Election and the Federal Reserve’s interest rate decision. Donald Trump’s victory boosted investor sentiment, sending indexes to record highs, particularly lifting sectors like financials, industrials, and small caps. Tech and semiconductor stocks, including Qualcomm and Arm Holdings, also contributed to the rally, though the sector displayed mixed earnings.
Internationally, European markets declined for the third consecutive week, though the STOXX 600 rose on Thursday after a Bank of England rate cut. German markets initially rallied on the announcement of a potential snap election but lost momentum. Asian markets ended mostly higher following China’s stimulus package announcement, though stimulus fell short of expectations.
In commodities, WTI crude rose 1.2%, while precious metals declined as the U.S. dollar strengthened. Yields on U.S. Treasuries fluctuated with election results and the Fed’s 0.25% rate cut, closing the week mostly lower.
Federal Reserve Insights and Economic Roundup
The Federal Open Market Committee delivered a 0.25% rate cut last week, citing a balanced outlook on inflation and employment. The Committee noted slower labor market growth but maintained a historically low unemployment rate. Despite this, Fed officials and market participants are recalibrating expectations, with markets now forecasting fewer total rate cuts through 2025 than previously anticipated.
The inflation outlook appears stable, with inflation expectations dipping to 2.6%—the lowest since 2020. However, the strong dollar and global growth concerns weigh on the international landscape, creating cautious sentiment as investors head into year-end.
The Week Ahead
Looking ahead, key economic releases include:
Tuesday: NFIB Small Business Optimism, New York Fed Inflation Expectations, Senior Loan Officer Survey.
Wednesday: Mortgage Applications, Real Earnings, CPI, and the Monthly Budget Statement.
Thursday: PPI, Initial and Continuing Jobless Claims.
Friday: Empire Manufacturing, Retail Sales, Import/Export Price Indexes, Industrial Production, Capacity Utilization, and Business Inventories.