(Bloomberg) — Stock markets extended post-election gains, the dollar was on track for a one-year high, and traders looked for clues about the Federal Reserve’s next move this week. Awaiting key inflation statistics.
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Stocks rose for five consecutive sessions, and the S&P 500 index reached the 6,000 mark, approaching a record high for the 51st time this year. Mega-cap stocks were mixed, with Tesla rising and Apple falling. The small-cap Russell 2000 rose 1.2%. The government bond market was closed due to a US holiday. Bitcoin surpassed $82,000 for the first time, boosted by President-elect Donald Trump’s support for the digital asset.
U.S. inflation will likely remain flat at best in October, highlighting the uneven path to easing price pressures toward the Fed’s goal. The core consumer price index, which excludes food and energy, to be released on Wednesday is likely to rise at the same pace on a monthly and annual basis compared to the September reading.
“With the election and further rate cuts in the rearview mirror, the question is whether the bulls can continue to push the market to new highs,” said Chris Larkin of Morgan Stanley’s E*Trade. “Aside from potential profit-taking after such a big rally, this week’s inflation data may decide whether the market inflates the gains.”
The S&P 500 rose 0.2%. The Nasdaq 100 fell 0.2%. The Dow Jones Industrial Average rose 1%.
US Treasury futures fell slightly. The Bloomberg Dollar Spot Index rose 0.7%. Bitcoin options traders are already eyeing its landmark price of $100,000 after the former cryptocurrency soared to a new record on hopes of a more crypto-friendly regime.
Crude oil prices fell as demand from China, a major importing country, weakened and the strong dollar worsened the outlook for crude oil prices.
U.S. stocks look a bit of a stretch from a valuation, positioning and sentiment perspective, said RBC Capital Markets’ Lori Calvasina.
He notes that while valuations for the S&P 500 and Russell 2000 indexes have not yet peaked, there is much less room for them to expand going forward.
JPMorgan Chase strategists led by Mislav Matejka say the sustainability of the stock rally following the U.S. presidential election victory will depend on developments in the bond market. As yields approach 5%, it may become difficult to invest in risky assets.
Corporate earnings will be one of the biggest drivers of U.S. stocks as investors’ focus returns to economic growth after the election.
As the third-quarter earnings season enters its final stages, S&P 500 companies posted an 8.4% profit increase, twice as much as expected, according to data compiled by Bloomberg Intelligence. Wall Street is even more optimistic heading into next year, as analysts expect revenue to rise 13%, the biggest increase since 2021, according to BI.
“Last week was a big event for financial markets. This week started where last week ended,” said Fawad Razaqzada of CityIndex and Forex.com. “Despite expectations of a close race, Trump secured a landslide victory, with Democrats taking most of the battleground states and scoring a decisive victory. This fuels gains in stocks, cryptocurrencies, and the dollar. The latter was further fueled by resilient economic indicators.”
He said the dollar could receive further support if Wednesday’s scheduled CPI release shows rising price pressures, given that high inflation could deter further Fed monetary easing. He said that there is.
CFRA’s Sam Stovall said a “red wave,” or complete Republican control of both the executive and legislative branches, appears to be the most likely outcome of the election.
“Contrary to conventional wisdom that the S&P 500 has recorded its best returns when Congress is deadlocked, historically the ‘red wave’ has caused the S&P 500 to have an average calendar year increase of nearly 13% under a Republican president,” he said. It hit a record high.” . “Also, the Russell 2000 typically benefits from red waves, rising an average of nearly 14% since 1980.”
Stovall concluded that the best returns under a Democratic president were certainly in a divided Congress scenario, with the S&P 500 posting an average gain of 16.6%.
Company highlights:
Nvidia Corp. has been elevated to Piper Sandler’s top large-cap pick, highlighting the artificial intelligence-focused chipmaker’s dominant position in AI accelerators and the upcoming launch of new Blackwell chips.
Cigna Group said it will not pursue a merger with rival insurance company Humana, following reports that the two companies have held new talks toward an agreement.
AbbVie fell after two mid-stage clinical trials of its schizophrenia drug missed key targets, hurting Celevel Therapeutics, which the company acquired for $8.7 billion earlier this year. .
MicroStrategy Inc. has bought approximately 27,200 Bitcoins for approximately $2.03 billion in one of the largest acquisitions of digital assets by a cryptocurrency hedge fund representative.
This week’s main events:
German CPI, ZEW Survey, Tuesday
Tuesday’s Fed speakers include Christopher Waller, Patrick Harker and Neil Kashkari
The Fed conducted a survey of bank lending executives on Tuesday.
Eurozone industrial production, Wednesday
US CPI, Wednesday
Wednesday’s Fed speakers include Jeffrey Schmidt, Laurie Logan, Neel Kashkari, and Alberto Musallem
Eurozone GDP, Thursday
US PPI, unemployment claims, Thursday
Walt Disney earnings Thursday
Fed speakers include Jerome Powell, John Williams and Adriana Kugler on Thursday.
China retail sales, industrial production, Friday
US Retail Sales, Empire Manufacturing, Industrial Production, Friday
The main movements in the market are:
stock
As of 9:56 a.m. New York time, the S&P 500 was up 0.2%.
Nasdaq 100 fell 0.2%
Dow Jones Industrial Average rose 1%
Stoxx European 600 rose 1.2%
MSCI World Index rose 0.1%
currency
Bloomberg Dollar Spot Index rose 0.7%
The euro fell 0.8% to $1.0636.
The British pound fell 0.5% to $1.2862.
The Japanese yen fell 0.8% to 153.88 yen to the dollar.
cryptocurrency
Bitcoin rises 3.2% to $82,504.2
Ether rose 0.2% to $3,178.71
bond
The 10-year government bond yield was almost unchanged at 4.30%.
Germany’s 10-year bond yield fell 2 basis points to 2.34%.
The UK 10-year bond yield rose 2 basis points to 4.45%.
merchandise
West Texas Intermediate crude oil fell 2.4% to $68.66 a barrel.
Spot gold fell 2.3% to $2,622.34 an ounce.
This article was produced in partnership with Bloomberg Automation.
