Stocks Hit Record Highs as Treasury Yields Fall and Bessent Treasury Appointment Fuels Optimism
Stocks finished higher on Monday as the equity market rallied, while Treasury yields dipped and bitcoin declined.
The Dow Jones Industrial Average soared 1% to an all-time closing high for the second straight day, while the S&P 500 advanced for the sixth straight day, closing 0.3% higher after setting an intraday record early Monday. The Nasdaq Composite rose 0.3% and is on track to set new records.
Stocks, which had a positive week, have resumed their post-election bounce as investors digest the news that President-elect Donald Trump has selected Wall Street veteran Scott Bessent as Treasury Secretary.
At session highs, the Russell 2000 increased by 1.47%, surpassing its previous all-time high from 2021. Investors believe Bessent, a hedge fund manager, will be supportive of the equity market.
They believe he might also help soften some of Trump’s most severe protectionist measures, such as his proposal to tax imports. I would urge that tariffs be implemented gradually, Bessent told CNBC earlier this month, before being selected.
If you combine that price adjustment with all of President Trump’s other disinflationary measures, we’ll be at or below the target inflation rate of 2% again.
Treasury Yields Drop as Investors Digest Trump’s Economic Team
Treasury yields and the US dollar index fell after the Bessent decision late Friday. The 10-year Treasury yield fell by more than 14 basis points on Monday. These movements, combined with the day’s equities market gains, indicate a “textbook” favourable reaction to Trump’s decision, stated Quincy Krosby, chief global strategist at LPL Financial.
Tech Stocks Show Mixed Performance as Nvidia and Tesla Decline
Large-cap technology stocks were mixed on Monday, with Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META) climbing and Nvidia (NVDA) and Tesla (TSLA) down. Nvidia shares fell 4.2%, extending the AI favorite’s volatile trading after quarterly results were released last Wednesday. In contrast, Tesla fell 4%, giving back some of the big gains the stock has made since the election amid confidence about CEO Elon Musk’s close relationship with Trump.
Super Micro Computer (SMCI) shares are up 16% as the server maker and Nvidia partner continues to climb after announcing a plan a week ago to escape delisting by the Nasdaq. The stock, which had been declining for months due to serious accounting difficulties, has more than doubled in the last six trading sessions.
Market Momentum Reignites Post-Election Rally as Investors Eye Inflation Data in Holiday-Shortened Week
Monday’s move supports the notion that last week’s gains have reignited the post-election rise. After climbing in the aftermath of the presidential election, the ascent had paused as concerns about increasing yields and the possibility of inflation from Trump’s proposals took hold.
Because of the Thanksgiving holiday, U.S. markets are closed on Thursday and early Friday, so trade volume is expected to be modest this week. During the abbreviated trading week, the interest rate forecast is expected to be a focus.
On Wednesday, investors will watch for the release of the Federal Reserve’s favoured inflation indicator, the personal consumption expenditures price index for October. Minutes from the Fed’s most recent policy meeting are also scheduled to be released before Thanksgiving.
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