[New York Stock Market] S&P 500 and Nasdaq Hit New Highs Again... Trump Rally and Interest Rate Cut Tailwind

Fed Cuts Interest Rate by 0.25%P to 4.5-4.75% Annual
Speed Adjustment After Big Cut in September
Tesla Surges Nearly 3%... Trump Media Drops Over 22%

In the U.S. New York stock market, the S&P 500 index and the Nasdaq index reached new all-time highs again on the 7th (local time). In addition to the 'Trump rally' driven by President-elect Donald Trump's pro-business policies, the Federal Reserve's (Fed) interest rate cut on the day further stimulated investor sentiment.

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 43,729.34, down 0.59 points (less than 0.1%) from the previous trading day. The large-cap-focused S&P 500 index rose 44.06 points (0.74%) to 5,973.1, and the tech-heavy Nasdaq index gained 285.99 points (1.51%) to close at 19,269.46, each setting new all-time highs once again.

The Trump rally combined with the Fed's interest rate cut to stimulate buying. The Fed, as expected after the November Federal Open Market Committee (FOMC) regular meeting, cut the benchmark interest rate by 0.25 percentage points from 4.75-5.0% to 4.5-4.75%. The decision was unanimous. This is the second rate cut since the 'big cut' (0.5 percentage point rate cut) in September this year, which marked the start of a monetary easing cycle after a rate hike in March 2022, 2 years and 6 months ago. Analysts interpret that the Fed is moderating the pace of monetary easing by reducing the size of the rate cut. However, there are expectations that the trend of rate cuts will continue.

Jamie Cox, Managing Partner at Harris Financial Group, said, "The risk balance between full employment and price stability provides the Fed with enough room to lower rates until next year," but added, "Unless the economy collapses downward, a large rate cut should not be expected."

Anna Wong, Economist at Bloomberg Economics, stated, "The Fed is signaling that it will place more weight on full employment and ease its focus on the price stability target," adding, "With the Fed cutting rates by 25 basis points (1bp = 0.01 percentage points) today to continue the rate cut cycle, an additional 25bp cut is expected in December."

The Fed's rate cut injected more vitality into the market already buoyed by the Trump rally. Currently, the market is filled with expectations that companies will greatly benefit from Trump’s policies such as corporate tax cuts, deregulation, and protectionism.

Scott Helfstein, Chief Investment Strategist at Global X ETFs, commented, "The results are out, and the financial markets can now breathe a little easier without the concerns that persisted throughout the election process."

By sector, technology stocks rose. AI leader Nvidia gained 2.24%. Apple rose 2.14%, and Microsoft (MS) increased by 1.25%. 'Trump beneficiary stocks' showed mixed results. Tesla rose 2.9% following a 14.75% jump the previous day. Meanwhile, Trump Media & Technology (DJT), which had surged nearly 6% the day before, plunged 22.97%, showing extreme volatility.

Following the impact of President-elect Trump, bond yields and the dollar, which surged the previous day, weakened. The U.S. 10-year Treasury yield, a global bond yield benchmark, dropped sharply by 10 basis points (1bp = 0.01 percentage points) to 4.32% compared to the previous trading day. The U.S. 2-year Treasury yield, sensitive to monetary policy, fell 7 basis points to around 4.19%. The dollar index, which measures the dollar's value against six major currencies, declined 0.72% to 104.23. The market expects that Trump's promised tariff hikes and tax cuts will lead to inflation and a widening fiscal deficit, which will stimulate interest rates and the dollar's value.

International oil prices rose. West Texas Intermediate (WTI) crude oil closed at $72.36 per barrel, up $0.67 (0.93%) from the previous trading day, and Brent crude, the global oil price benchmark, ended at $75.63 per barrel, up $0.71 (0.95%).