Market Resurgence: Stocks Rally Amid Relaxing Treasury Yields and Expectation of Policy Adjustments
Following a recent dip, the stock market bounced back as pressure on Treasury yields eased, with the 10-year yield edging towards 4.5%. Investor attention shifted towards the incoming administration of President-elect Donald Trump, sparking positivity for tech stocks and overall market stability.
The Nasdaq 100, heavily influenced by tech entities, concluded its lengthiest downward streak since January, propelled by a 6% rise in Tesla Inc. shares. Reports emerged that Trump’s transition team aims to prioritize developing a federal framework for fully autonomous vehicles within the Transportation Department. In contrast, Nvidia Corp. faced a setback as it managed supplier adjustments related to its new Blackwell graphics processing unit ahead of its upcoming earnings release. Long-term Treasury bonds faced challenges, with 30-year yields nearing earlier highs from May. Notably, Bitcoin prices soared above $91,000, underlining ongoing interest in cryptocurrencies.
Analysts from Morgan Stanley projected an upward path for the S&P 500, foreseeing it reaching 6,500 points by the close of 2025, indicating an 11% rise from the previous week’s end. This anticipated growth is pinned on economic expansion prospects and potential Federal Reserve interest rate cuts. However, Lori Calvasina of RBC Capital Markets urged caution, hinting that last week’s market downtick might be the start of a more considerable decline, possibly up to 10%. Chris Larkin from E*Trade commented, “Traders seem to be assessing the potential impact of President Trump’s policies on the economy and the chances of the Fed adjusting its rate-cutting strategies.”
The S&P 500 saw a 0.5% uptick, while the Nasdaq 100 rose by 0.9%. The Dow Jones Industrial Average held steady. 10-year Treasury bond yields remained largely unchanged at 4.44%, alongside a 0.3% drop in the Bloomberg Dollar Spot Index.
On the corporate front, Nvidia faced hurdles as it directed suppliers to adjust server rack designs for its new graphics processing unit due to heat concerns. Conversely, Super Micro Computer Inc. observed stock gains ahead of a deadline for its 10-K annual report filing. MicroStrategy Inc. revealed a significant acquisition of around 51,780 Bitcoin valued at roughly $4.6 billion, marking its biggest purchase in over four years. In contrast, Spirit Airlines Inc. declared bankruptcy amid heightened competition and financial struggles post a failed merger attempt with JetBlue Airways Corp. Additionally, CVS Health Corp. named Glenview Capital Management founder Larry Robbins to its board following pressure from activist investors for organizational alterations.
Looking forward, significant economic happenings this week include data releases on Eurozone CPI and US housing starts, providing further insights into market trends. Nvidia’s earnings report is eagerly awaited and could be influential in steering short-term market dynamics.
The primary market movements reported are as follows:
- S&P 500: increased by 0.5%
- Nasdaq 100: rose by 0.9%
- Dow Jones Industrial Average: remained unchanged
- Bloomberg Dollar Spot Index: down by 0.3%
- Bitcoin: surged by 2.4% at around $91,315.29
- West Texas Intermediate crude: climbed by 2.8% to $68.90
To sum up, the recent market rebound mirrors a delicate dance involving Treasury yields, investor outlook on forthcoming Trump policies, and corporate earnings. As stakeholders navigate this evolving terrain, forthcoming economic pointers and company performances will play a pivotal role in shaping market directions.
