By The five-day election rally sputtered on Tuesday as the market turned its attention toward incoming economic data.
Some parts of the Trump trade maintained momentum, with crypto and FX traders cheering on the president-elect’s policies. But while bitcoin and the US dollar continued to push higher, equity indexes retreated Monday’s closing highs.
The Dow Jones Industrial Average lost nearly 350 points after hitting a record high over 44,000 in the previous session. The post-election rally in financials and small-caps also stumbled.
Hurting the Trump bump on Tuesday was the surge in bond yields. The 10-year Treasury yield spiked aggressively, surging 13 basis points. The sharp rise comes a day ahead of October’s consumer inflation report. Wall Street is eyeing for any upside price surprise, which could unwind interest rate cut outlooks.
Economists expect a 2.5% year-over-year jump in Wednesday’s CPI data, compared to a rise of 2.4% in the prior month.
“The inflation numbers might tick up a little this week as some areas like transportation, consumer durables, and rent have been harder to get under control. After steady progress, we might be leveling off, but the Fed has made progress toward their target,” said Scott Helfstein, Global X head of investment strategy. “There is no reason to believe that one month of data will change the Fed strategy, and a 25 bp cut in December remains the base case.”
Still, the market indicates a 37.9% chance that the Federal Reserve will keep interest rates steady next month. Trump’s policies are expected to have a potentially inflationary impact, and the market is debating whether interest rates will remain higher for longer as the Fed is again forced to confront rising prices.
“Inflation is not tamed,” Apollo’s co-president Scott Kleinman told Bloomberg TV. “The Fed can say what it wants. You just have to open your eyes and look around.”
Here’s where US indexes stood at the 4:00 p.m. closing bell on Tuesday:
- S&P 500: 5,983.99, down 0.29%
- Dow Jones Industrial Average: 43,910.98, down 0.86% (-382.15 points)
- Nasdaq composite: 19,281.40, down 0.09%
Here’s what else happened today:
- The postelection rally is disconnected from fundamentals, David Rosenberg said.
- Dogecoin is worth more than Ford as Trump’s win propels total crypto market cap to $3 trillion.
- Tesla stock could soar 50% amid Elon Musk’s new political influence, Morgan Stanley says.
- Hertz’s failed Tesla bet weighs down its earnings, tanking shares in the car rental company.
- “Dr. Doom” Nouriel Roubini warns of stagflation under Trump’s policies.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil inched up 0.21% to $68.18 a barrel. Brent crude, the international benchmark, increased by 0.17% to $71.95 a barrel.
- Gold was shed 0.5% hitting $2,604.7 an ounce.
- The 10-year Treasury yield spiked 13 basis points to 4.441%
Bitcoin rose 2.79% to $89,552.
