Fed's Rate Cut Spurs U.S. Stock Surge as Trump Trade Resurfaces
On November 7, the Federal Reserve announced a 25 basis point cut in the federal funds rate, lowering the target range to 4.5% to 4.75%. This marks the second such cut since September, amounting to a total reduction of 75 basis points this year. This move aligns with widespread market expectations, signaling the continuation of a more accommodative monetary policy stance by the Fed.
In the wake of the Fed's announcement, U.S. stock markets surged to new heights. The Dow Jones Industrial Average, the Nasdaq Composite, and the S&P 500 all reached record intraday and closing highs. Major tech stocks led the rally, with Tesla and Nvidia posting notable gains. Notably, Nvidia's market capitalization soared to over $3.6 trillion, cementing its status as a leading player in the tech sector amid the growing emphasis on artificial intelligence development.
The concept of the "Trump Trade" also resurfaced following former President Donald Trump's announcement of his victory in the 2024 U.S. Presidential Election. This catalyzed notable market movements, as investors anticipated potential policy shifts such as tax cuts and deregulation, which could favor various sectors like technology and finance. Consequently, related stocks witnessed significant spikes, with Tesla receiving a particular boost partly due to the outspoken support from CEO Elon Musk.
On the international stage, the U.S. dollar index experienced a significant rise, reflecting increased investor confidence following Trump's electoral declaration. Conversely, commodities priced in dollars, such as gold and silver, faced downward pressure, with notable declines in their spot prices.
The dynamics in the global foreign exchange markets also saw substantial turbulence. The strengthening of the U.S. dollar applied substantial devaluation pressure on non-dollar currencies, with notable depreciation in the Mexican peso and other emerging market currencies.
As geopolitical tensions and policy expectations evolve, these financial developments underscore the intricate interplay between political events and market reactions. Observers will closely watch forthcoming Fed decisions amid the continuing influence of Trump's anticipated economic policies on global markets.