Wall Street’s main indexes were mixed and near record highs on Monday, with Tesla surging ahead of an upcoming batch of economic data that could influence the Federal Reserve’s pace of interest rate cuts.
Several stocks added to gains they have notched since Republican Donald Trump won the election, as traders expect them to benefit from his return to the White House.
Tesla jumped almost 9% and reached a $1.1 trillion market value, fueled by bets the automaker will benefit from CEO Elon Musk’s close ties to Trump.
Traders had exchanged over $56 billion worth of Tesla shares as of mid-afternoon, accounting for a quarter of all trading in S&P 500 companies, according to LSEG data.
The S&P 500 financial index jumped 1.5%, with banks helping lift the Dow Jones Industrial Average to a record high.
The small-cap Russell 2000 jumped 1.5% to its highest level since last November 2021 and was near a record high.
Smaller companies are viewed as potential beneficiaries Trump’s proposed tax cuts and expected looser regulations.
Microsoft , Amazon and Meta Platforms each dipped almost 1%.
The S&P 500 has rallied almost 4% since Trump’s victory last Tuesday, while the Nasdaq has gained almost 5%.
“It’s been a wild four days since the election and the market is taking a breath,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “But the trend is moving higher. I would not be surprised if the Trump rally bleeds into a Santa Claus rally.”
The Nasdaq retreated after hitting a record high during the session. The S&P 500 information technology index fell 1.2% and the PHLX chip index lost 3.3%, with AI heavyweight Nvidia dripping nearly 2%.
The S&P 500 was up 0.09% at 6,000.68 points.
The Nasdaq was down 0.06% at 19,274.65 points, while the Dow Jones Industrial Average was up 0.76% at 44,322.01 points.
Crypto stocks rallied as bitcoin soared past a record $84,000. Coinbase Global jumped 22% and bitcoin miners MARA Holdings and Riot Platforms gained 29% and 20%, respectively.
Investors are watching consumer price inflation data, due Wednesday, and a raft of other key data this week for signals on the economy and monetary policy outlook.
The U.S. Federal Reserve cut interest rates by 25 basis points last week, and interest rate futures imply traders see a 65% chance of another 25 basis point cut at the central bank’s December meeting, according to CME FedWatch.
“With policymakers already so cautious about the risk of renewed price pressures, particularly amid the continued strength of the U.S. economy, the Fed will need to tread a cautious path,” warned Seema Shah, chief global strategist at Principal Asset Management.
Advancing issues outnumbered falling ones within the S&P 500 by a 2.1-to-one ratio.
The S&P 500 posted 116 new highs and seven new lows; the Nasdaq recorded 344 new highs and 68 new lows.
Investors are increasingly factoring what potential Republican control of government could mean for stocks, bonds and currencies, even as the first feverish market reactions to Donald Trump’s presidential victory begin to settle.
A so-called red sweep scenario, in which Republicans control the White House and both houses of Congress, could clear the way for Trump to implement his economic proposals with a freer hand. Many, such as tax cuts, are seen as being growth-friendly but also driving up inflation risks.
Republicans held a narrow edge on Friday as election officials tallied the final votes that will determine control of the U.S. House of Representatives, though Democrats succeeded in flipping a pair of New York state seats.
“With many of Trump’s policies geared to support stocks, particularly small caps, markets are likely to respond well to a red sweep,” said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.
Expectations that such policies will be pushed through under Trump to some degree have helped lift corners of the stock market higher, boost the dollar and weigh on Treasuries, as investors recalibrated their portfolios for stronger growth, looser regulations and the possibility that inflation worries could keep the Federal Reserve from cutting rates too deeply next year.
One notable move has been in small cap stocks, with the Russell 2000 index up about 8% this week.
While some of those moves have lost steam in recent days, investors are still gaming out how Trump’s policies could affect markets and the economy over the long-term, especially under a red sweep scenario.
Trump has promised to slash federal regulations that he says limit job creation. He has pledged to keep in place a 2017 tax cut he signed while in office, and Trump’s economic team has discussed a further round of individual and corporate tax cuts beyond those enacted in his first term.
Strategists at Goldman Sachs said their earnings per share estimates for the S&P 500 would rise by about 4% if Trump reduced the statutory domestic corporate tax from 21% to 15%.
Deutsche Bank analysts said they would upgrade their 2025 U.S. growth forecast to 2.5-2.75% from 2.2% in the event of a red sweep. However, they expect to reduce their 2026 growth forecast in anticipation of economic uncertainty associated with an intensifying trade war.
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