The stock market experienced a significant downturn this week, as the post-election rally sparked by President-elect Donald Trump’s victory began to fade. Investors reacted to Federal Reserve Chair Jerome Powell’s comments indicating that the Fed is not in a hurry to cut interest rates, leading to a reassessment of economic conditions and market expectations.

Key Takeaways

• Major indices fell sharply, with the S&P 500 down 1.3%, the Dow Jones Industrial Average down 0.7%, and the Nasdaq Composite down 2.2%.
• Powell’s hawkish remarks have dampened investor optimism, reversing a significant portion of the post-election gains.
• Retail sales data showed resilience in consumer spending, but inflation concerns remain prevalent.

Market Overview

The week concluded with a notable decline in U.S. stocks, marking the worst performance for the S&P 500 since early September. The S&P 500 lost 78.55 points, closing at 5,870.62, while the Nasdaq Composite fell by 427.53 points to 18,680.12. The Dow Jones Industrial Average also saw a decrease, shedding 305.87 points to finish at 43,444.99.

Investors are grappling with the implications of Powell’s statements, which suggest that the Fed is cautious about making any rapid changes to interest rates. This sentiment has led to a decline in expectations for a rate cut at the upcoming December meeting, with traders now pricing in only a 62% chance of a cut, down from 72% the previous day.

Economic Indicators

Recent economic data has shown mixed signals:

• Retail Sales: October retail sales rose by 0.4%, surpassing expectations of 0.3%. This increase indicates continued strength in consumer spending, which is crucial for economic growth.
• Inflation: While consumer inflation met expectations, producer inflation exceeded forecasts, raising concerns about the sustainability of the disinflationary trend.

Investor Sentiment

The market’s reaction to Powell’s comments reflects a broader uncertainty among investors regarding the future direction of economic policy under the incoming Trump administration. The potential for higher tariffs and cuts to government spending has added to the volatility, as investors reassess the implications of Trump’s proposed policies.

Sector Performance

The technology sector, which had previously benefited from the post-election rally, was particularly hard hit this week. Notable declines included:

• Nvidia: Down 4.2%, marking its largest drop this month.
• Healthcare Stocks: Shares of companies like Pfizer and Moderna fell sharply following Trump’s nomination of Robert F. Kennedy Jr. as Secretary of Health and Human Services, raising concerns about future healthcare policies.

Conclusion

As the market adjusts to the new economic landscape, investors are left to navigate a complex environment characterized by uncertainty and shifting expectations. The fading post-election rally serves as a reminder of the delicate balance between economic indicators and investor sentiment, particularly in the face of potential policy changes under the new administration.

Sources

• Yahoo on osa Yahoon tuotemerkkejä., Yahoo Finance.
• Stock market today: Dow, S&P 500, Nasdaq sink as post-election rally fades, Fed prompts rate-cut rethink, Yahoo Finance.
• Post-election stock market rally fades as dollar surges, Detroit Free Press.
• Stock Market Today: Dow ends 300 points lower as rate-cut doubts stall postelection rally – MarketWatch, MarketWatch.
• Stock Market Today: Dow, S&P Live Updates for November 15 – Bloomberg, Bloomberg.