November 18: The “euphoria” that followed the return of Mr. Trump as president is beginning to fade in the US stock market. The photo shows Trump, who was elected as the next president of the United States, appearing on the screen on the 6th. Photo at the New York Stock Exchange (2024 Reuters / Andrew Kelly)
NEW YORK (Reuters) – In the US stock market, the euphoria that followed Trump’s return as president is beginning to fade. This is because investors’ attention has shifted from Mr. Trump’s pro-growth measures to the fiscal and inflationary effects of those policies. The positions of government employees, which have been announced one after the other, are also beginning to be recognized as a risk factor.
Mr Trump has argued that high tariffs on imports from China and other countries would boost US manufacturing and bring in enough revenue to ease worries about a looming budget deficit. expansion and acceleration of inflation. However, it is not clear at this stage when and in what form the economic policies promised by Mr. Trump will be implemented.
“I don’t think it’s going to be that easy,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.
Both the stock and bond markets are concerned about the uncertainty that could restore some of the inflationary policies and affect future Federal Reserve interest rate cuts.
As yields rise, stocks become less attractive compared to safe US Treasuries.
The equity risk premium, which measures the S&P 500’s earnings yield relative to the 10-year Treasury yield, is at its lowest level since mid-2002, said Keith Lerner, co-chief investment officer at Trust Advisory Services.
Since key cabinet positions require Senate approval, it’s possible things won’t go according to Trump’s wishes. Still, uncertainty has led some investors to “sell first, ask questions later,” said King Lipp, chief strategist at Baker Avenue Wealth Management.
Strategists at BofA Global Research said Tuesday that the risk to next year’s economic growth forecast of 2.3% could shift in either direction due to uncertainty about Trump’s policies. If the country focuses on fiscal expansion and deregulation, growth could exceed 3%, but high tariffs and a trade war could push the economy into recession.
Since 1952, the S&P 500 index has risen an average of 3.3% in the last two months of a presidential election year, according to Lerner Truist. Ross Mayfield, investment strategist at Baird Private Wealth Management, said that, combined with strong corporate results and healthy growth, has led to continued optimism.
Post-election gains have faded in the broader market and for other assets, and some corners of the market have struggled.
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2024-11-19 06:49:00
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– How did the “Trump trade” specifically affect Tesla’s stock price and the overall cryptocurrency market?
1. What are some of the potential risks facing the stock market as investors navigate the policies of the Trump administration?
2. How has the so-called “Trump trade” impacted certain industries and companies, such as Tesla and bitcoin?
3. What factors are driving the current market optimism, and is it sustainable in the face of economic uncertainties?
4. Will finance ministers reconsider raising interest rates if government bond yields continue to rise, and what implications could this have for the stock market?
5. What are some unique challenges facing the incoming Biden administration in terms of their economic policies?
