By US stocks rallied on Monday, with the Dow Jones Industrial Average hitting a fresh record high and key postelection trades reversing course after President-elect Donald Trump made a high-profile cabinet appointment.
Trump chose Scott Bessent to be his Treasury Secretary after the market closed on Friday. Bessent is a hedge fund manager who worked for George Soros’s Soros Fund Management before launching his own fund, Key Square Capital Management, in 2015.
Investors have reacted positively to the news, as Bessent is a well-known global macro investor, and it’s believed that he will likely pursue pro-market policies in his leadership of the Treasury.
The choice was highly contested among Trump’s inner circle, with Cantor Fitzgerald CEO Howard Lutnick and Apollo CEO Mark Rowan also vying for the job.
Bessent previously told his hedge fund clients in January that a Trump win would result in economic plans that would usher in an “economic lollapalooza” via deregulation and lower taxes.
Some assets that had moved on the expectation that Trump’s policies would be inflationary also reversed course after Bessent was named to the post.
On Monday morning, assets including gold, the US dollar, and Treasurys sold off.
The dollar posted its biggest drop in two weeks after rallying against rival currencies following the election. Meanwhile, the 10-year Treasury yield dropped sharply, dipping by eight basis points to 4.32%.
Yields following Trump’s victory had jumped to their highest level in months, fueled by the expectation that the Federal Reserve would be forced to keep rates high to counter the inflationary impact of Trump’s proposals for tariffs, tax cuts, and mass deportations.
Markets see Bessent as a potential counter to some of Trump’s more expansionary policies. In a note following the announcement, research firm Exante Data said that it saw Bessent’s pick as constructive in the context of uncertain policy outcomes under Trump, specifically the potential inflationary impact of tax cuts and tariffs.
“Scott has intellectual curiosity and a deep historical perspective that will allow him to operate in a highly uncertain new regime, and serve as a strong independent analytical voice at a time of mounting economic challenges for the US and the global economy.”
“It is against this background that thoughtful leadership at the US Treasury is so crucially needed. An approach that is realistic about what tax cuts are possible (including their impact on growth). An approach that is realistic about what amount of bond issuance the market can take, taking into account the relationship the US has with key bond buyers around the world,” the firm added, noting that Bessent would likely look to avoid any disruption to markets.
Meanwhile, it’s a busy week for economic data despite the shortened holiday week.
Investors will get initial jobless claims, a third-quarter GDP revision, and personal consumption expenditures data on Wednesday morning, as the stock market is closed on Thursday in observance of Thanksgiving.
Economists expect initial jobless claims to come in at 215,000, and third-quarter GDP growth to be 2.8%, while PCE inflation data is expected to be the same as last month at 0.2% on a month-over-month basis.
Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Monday:
- S&P 500: 6,011.42, up 0.69%
- Dow Jones Industrial Average: 44,738.01, up 1% (+441.50 points)
- Nasdaq composite: 19,142.13, up 0.72%
Here’s what else is going on:
- Economists say Trump’s immigration plans could deepend US demographic challenges.
- The stock market could be a key check on Donald Trump’s agenda during his second term in office.
- Here’s what a strategic bitcoin reserve could mean for the price of the cryptocurrency.
- The rise of passive investing in the stock market could lead to more volatile trades during risk-off periods.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil dropped 1.75% to $69.99 a barrel. Brent crude, the international benchmark, was lower by 1.56% to $74.00 a barrel.
- Gold declined 1.84% to $2,662.20 an ounce.
- The 10-year Treasury yield dropped 11 basis points to 4.30%.
- Bitcoin fell 0.55% to $97,475.
