[New York Stock Market] 'Wall Street Veteran' US Treasury Appointment Lifts Dow to Record High... Dollar Falls, Bonds Rise

Relief Over Vicente's Nomination as Treasury Secretary
Expectations for Balanced Tax Cuts and Tariff Increases
Wall Street Recommends 'Overweight' on US Stocks and Bonds
FOMC Minutes on 26th, PCE Inflation on 27th

'The Trump rally is gone, the Bessent rally has arrived.'

The three major indices of the U.S. New York stock market all closed higher on the 25th (local time). Donald Trump, the President-elect of the United States, nominated Scott Bessent, CEO of hedge fund Key Square Group, as the Treasury Secretary for his second administration, sparking a cheer rally with the Dow Jones Industrial Average breaking its record high. Veteran Wall Street investor Bessent CEO is expected to lead the new administration's economic policy and moderate the radical tax cuts and protectionist trade policies promised by Trump. The dollar value and government bond yields, which had surged amid inflation and high interest rate expectations triggered by Trump, also turned downward.

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average rose 440.86 points (0.99%) from the previous trading day to close at an all-time high of 44,736.57. The large-cap-focused S&P 500 index increased by 18.03 points (0.3%) to 5,987.37, and the tech-heavy Nasdaq index rose 51.18 points (0.27%) to close at 19,054.83.

The market cheered the appointment of Bessent CEO as Treasury Secretary. A billionaire from Wall Street hedge funds, he is highly knowledgeable about the market and is regarded as the right person to lead Trump’s second-term economic policy both on Wall Street and in Washington. While supporting Trump’s key campaign promise on tariff policy, he has suggested a "gradual imposition," raising expectations that Bessent CEO could put the brakes on Trump’s more extreme policy proposals. The stock market surged immediately after the election as investors focused on Trump’s pro-business policies, but the 'Trump rally' cooled down as investors began to seriously evaluate the impact of his tariff hikes and tax cut promises. However, with this Treasury Secretary appointment easing inflation and high interest rate concerns, the 'Bessent rally' is now underway again.

Expectations that Trump’s promised tariff hikes and tax cuts would prolong inflation and high interest rate trends had driven up the dollar value and government bond yields, but these have shifted to a weaker trend following the Treasury Secretary appointment. The dollar index, which measures the dollar’s value against six major currencies, hit a two-year high on the 22nd but is now trading at 106.83, down 0.62% from the previous day. Government bond yields are also falling (bond prices rising). The U.S. 10-year Treasury yield, a global bond yield benchmark, dropped 14 basis points (1bp = 0.01 percentage points) to 4.27%, and the 2-year Treasury yield, sensitive to monetary policy, fell 10 basis points to 4.26%. Robeco Asset Management has recommended 'overweight' positions in U.S. stocks and government bonds.

Quincy Crosby, Chief Global Strategist at LPL Financial, said, "The rise in the stock market and bond prices today is a textbook positive reaction to Trump’s decision," adding, "The market couldn’t ask for a better response. It is applauding the nomination of Bessent CEO."

Ed Mills, Washington policy analyst at Raymond James, analyzed, "Investors, as macro investors, see Bessent CEO’s experience as helping Trump understand the cascading effects of trade, tariffs, taxes, and deregulation agendas," adding, "If Bessent CEO can extend tax cuts, push deregulation, and delay or limit tariff policies, it would support U.S. industry and GDP growth and be welcomed by the market."

While the market cheers Trump’s second-term Treasury Secretary appointment, key events that investors should watch this week include inflation data and the release of the Federal Reserve’s November Federal Open Market Committee (FOMC) minutes. The U.S. Commerce Department is expected to report on the 27th that the October Personal Consumption Expenditures (PCE) price index rose 0.2% month-over-month and 2.3% year-over-year, slightly higher than the 2.1% annual increase in September. On the same day, the preliminary U.S. third-quarter GDP growth rate is expected to show a solid 2.8% annualized increase from the previous quarter.

The day before, on the 26th, the November FOMC minutes will be released. If the minutes reveal hawkish messages from Fed officials and the previous month’s PCE inflation exceeds market expectations, there is a possibility that the December interest rate will be held steady. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market currently prices a 55.9% chance of a 0.25 percentage point rate cut and a 44.1% chance of a rate hold at the FOMC regular meeting scheduled for December 17-18.

By individual stocks, Bath & Body Works rose 16.51% on strong earnings and an upward revision of its annual outlook. Macy’s fell 2.21% after revealing that an employee concealed millions of dollars in expenses and announced a delay in its third-quarter earnings report. The Russell 2000 index, composed of small- and mid-cap stocks, rose 1.47%.

International oil prices fell on news of a ceasefire negotiation agreement between Israel and the Lebanese militant group Hezbollah. West Texas Intermediate (WTI) crude oil closed at $68.94 per barrel, down $2.30 (3.23%) from the previous trading day, while Brent crude, the global oil price benchmark, closed at $73.01 per barrel, down $2.16 (2.87%).

Meanwhile, the New York stock market will have shortened trading hours this week due to Thanksgiving. The market will be closed on Thanksgiving Day, the 28th, and will close early on the 29th.