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Stock Market Surge: Trump's Victory and Fed Anticipation Dominate the Day
November 7, 2024, will be remembered as a pivotal day in the stock market, marked by a historic rally fueled by Donald Trump's victory in the U.S. Presidential election and anticipation of a key Federal Reserve decision.
Trump's Victory Sparks Market Euphoria
The day began with a bang as stock futures built on the gains from the previous session, driven by Trump's electoral win. The Dow Jones Industrial Average ($DJIA) soared 3.57% on Wednesday, adding 1,508.05 points to close at 43,729.93, the largest post-election surge in 128 years.
The S&P 500 followed suit, climbing 2.53% or 146.28 points to an all-time high of 5,929.04. This broad-based rally saw significant gains across various sectors, with financials, industrials, tech, and consumer discretionary stocks leading the charge. The Financials Select Sector SPDR ($XLF) jumped 6.1%, while the Technology Select Sector SPDR ($XLK), Consumer Discretionary Select Sector SPDR ($XLY), and Industrials Select Sector SPDR ($XLI) gained 2.9%, 3.2%, and 3.9%, respectively.
The tech-heavy Nasdaq Composite was not left behind, rallying 2.95% or 544.29 points to close at a new high of 18,983.47. The small-cap Russell 2000 index surged an impressive 5.8%, hitting a three-year high on optimism that domestically focused stocks would benefit from lighter regulations and lower taxes under Trump's administration.
Sectoral Performance and Key Stocks
The financial sector was a standout performer, with shares of JPMorgan Chase & Co. ($JPM) jumping 11.4% and Wells Fargo & Company ($WFC) soaring 13.1%. Tesla, Inc. ($TSLA), whose CEO Elon Musk is a prominent supporter of Trump, saw its shares surge over 14%.
However, not all stocks shared in the euphoria. Trump Media ($DJT) shares plunged nearly 14% in early trading on Thursday, while Tesla ($TSLA) and bitcoin ($BTCUSD) gave back some of their gains from the previous day. Bitcoin, which had surged to an all-time high of more than $76,000, traded lower by about 1% to around $74,800.
Earnings and Corporate News
Several companies reported strong earnings, contributing to the market's positive sentiment. Lyft ($LYFT) shares jumped more than 20% after the ride-hailing app reported better-than-expected quarterly results and raised its outlook. Lyft posted a third-quarter revenue increase of 32% year-over-year to $1.5 billion and a narrower net loss than expected.
Qualcomm ($QCOM) shares moved higher by more than 7% after the company reported strong revenue gains and announced a $15 billion stock buyback plan. However, Arm Holdings ($ARM) shares declined due to a lower-than-expected sales forecast for the current quarter, despite topping analyst estimates for revenue and net income.
Zillow ($Z) shares also saw a significant jump due to improved revenue and narrower losses for the real-estate site.
Federal Reserve Decision Looms
As the market celebrated Trump's victory, all eyes were on the Federal Reserve's interest rate decision scheduled for later in the day. Fed watchers anticipated a quarter-point interest rate cut, which would bring the federal funds rate down to a range of 4.5% to 4.75%. This move follows a more aggressive rate cut in September and reflects cooling inflation and signs of weakness in the job market.
The Fed's decision and subsequent comments from Fed Chair Jerome Powell were highly anticipated, as investors sought insight into the central bank's future plans. With inflation cooling and the job market showing signs of weakness, officials have projected a series of rate cuts over the coming year.
Global Markets React
The positive sentiment in U.S. markets was echoed globally. European markets opened higher as investors digested the U.S. presidential election's outcome and looked ahead to monetary policy decisions from the U.S. Fed and the Bank of England.
In Asia, most indices traded higher following Trump's victory, with China's better-than-expected October export data adding to the optimism. Hong Kong's Hang Seng index was up 2.02%, while China's Shanghai Composite and Shenzhen Component indices gained 2.57% and 2.44%, respectively. Japan's Topix index finished higher by 1%, although the Nikkei index declined by 0.25%.
Market Metrics and Sentiment
The fear-gauge CBOE Volatility Index (VIX) was down 20.6% to 16.27, reflecting reduced market volatility. On the New York Stock Exchange (NYSE), advancers outnumbered decliners by a 1.51-to-1 ratio, while on the Nasdaq, a 1.84-to-1 ratio favored advancing issues. Total trading volume was higher than the last 20-session average, with 18.68 billion shares traded on Wednesday.
Treasury yields, which had surged on the election results, remained little changed in early Thursday trading. The benchmark 10-year note yield hovered near 4.428%, while WTI crude oil futures trended lower, hovering near $71.56 per barrel.
Conclusion: A Day of Records and Anticipation
November 7, 2024, was a day of records and anticipation in the stock market. Trump's victory ignited a broad-based rally, with major indices hitting new highs. The financial, energy, and industrial sectors, poised to benefit from potential tax cuts and deregulation, were among the biggest gainers.
As the market looks forward to the Federal Reserve's interest rate decision and subsequent comments from Fed Chair Jerome Powell, investors remain optimistic about the potential economic benefits of Trump's second term. However, the market's reaction to specific stocks and sectors will continue to be closely watched, as the interplay between policy changes, earnings reports, and economic data shapes the future trajectory of the markets.
In this dynamic and ever-changing landscape, one thing is clear: the stock market is poised for significant movements in the days and weeks ahead, driven by both domestic and global factors. As investors navigate this complex environment, staying informed and adaptable will be key to making informed decisions.
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