The Federal Reserve's decision to implement a second consecutive interest rate cut, lowering the benchmark overnight borrowing rate by 25 basis points to a target range of 4.50%-4.75%, also contributed to the market's optimism. The move was unanimously approved by the Federal Open Market Committee, in contrast to the previous rate cut which saw the first "no" vote from a Fed governor since 2005.
Last week saw a mixed performance across the S&P 500 sectors, with Consumer Discretionary leading gains at +7.6%, followed by Energy (+6.2%), Industrials (+5.9%), Financials (+5.5%), and Information Technology (+5.4%). Sectors with more modest increases included Telecom (+3.7%) and Real Estate (+2.7%), while Consumer Staples and Utilities each rose by +1.2%. Healthcare (+1.6%) and Materials (+1.5%) also posted small gains, reflecting overall positive momentum across the index, with strong growth particularly in consumer and energy-related sectors. Notably, egg prices surged over 100% as a severe wave of Bird Flu impacted farms nationwide, putting additional pressure on Consumer Staples.
Financial markets have reacted positively to the election outcome, with the S&P 500 and Nasdaq reaching new all-time highs in the immediate aftermath. Investors appear to be betting on a continuation of the pro-business, tax-cutting policies that characterized Trump's first term.
However, the road ahead may not be entirely smooth. Heightened political polarization, potential trade tensions, ballooning federal debt, and the looming threat of a recession could introduce volatility and uncertainty into the markets.
Nonetheless, with the Republican Party firmly in control, the general consensus among analysts is that the next four years will see a continuation of the economic trends that have defined the previous Trump presidency - for better or for worse.
Overall, the S&P 500 and Dow logged their best weekly performance since November 2023, each gaining 4.7%, while the tech-heavy Nasdaq led the charge with a 5.9% surge.
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