Jakarta, CNBC Indonesia – United States (US) stocks moved mostly flat at the market open this weekend, Friday (8/11/2024), it seems that market players are starting to take profits and find out the latest policy from the Federal Reserve.
The S&P 500 index rose 0.1%, while the Nasdaq Composite fell slightly. The Dow Jones industrial average rose 100 points or 0.2%.
All three major indexes are on track for strong weekly gains, thanks to a big rally on Wednesday (6/11/2024) following the victory of President-elect Donald Trump. where the S&P 500 rose about 4.4% and the Dow rose 4.2%. Both are on track for their best weeks since November 2023. The Nasdaq even outperformed those gains, jumping 5.7% through Thursday’s close.
In Thursday’s trading session (7/11/2024), the broad market index rose 0.7% and closed at a new record. The tech-heavy Nasdaq jumped 1.5% and finished above 19,000 for the first time. At the same time, the Dow, which consists of 30 stocks, fell slightly. All three major indices hit intraday highs during the session.
Small-cap stocks are also hot, with the Russell 2000 up more than 7% for the week through Thursday.
According to CNBC, Barclays strategist Venu Krishna said in a note to clients that “equities are looking to price in Trump’s domestic growth policy (via small stocks) and expectations of easier governance compared to the Biden administration , ”
“Whether this trend is sustainable remains to be seen; momentum extended the way up as ‘winners keep winning,’ and the sharp movements of Election Day have pushed the major indexes close to (or even into) the technical zone that was too in terms of [Russell 2000]),” said Krishna.
Investors generally view a Republican-controlled government more favorably due to expectations of deregulation, the potential for more mergers and acquisitions, and proposed tax cuts. However, concerns about large federal deficits and tax increases have also raised concerns about rising inflation.
On Thursday, the Federal Reserve cut interest rates by a quarter point, in line with market expectations. Fed Chairman Jerome Powell said he “feels good” about the economy at a press conference.
However, “the Fed’s rate cut path is less clear today than it was last week before the election,” said Scott Helfstein, chief investment strategist at Global X ETFs.
“Markets are signaling that the Trump administration will be good for growth and risk assets, but the combination of faster growth with new tariffs will be at the rate of inflation,” he said.
“While the Fed feels that the risks between stable prices and higher earnings are balanced, this could change quickly, increasing the risk of a rebound in inflation.”
CNBC INDONESIA RESEARCH
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