US equity indexes experienced an increase this week, driven by a definitive outcome in the presidential elections as the Federal Reserve maintained its trend of easing monetary policy. The Dow Jones Industrial Average finished at 43,988.99 on Friday, up from 42,052.19 the previous week. Similarly, the S&P 500 closed at 5995.54, rising from 5,728.80, while the Nasdaq Composite rose to 18,286.78 from 18,239.92 just a week prior. Increased investor confidence was evident as sectors including industrials, consumer cyclicals, and technology emerged as significant gainers.
The removal of uncertainty regarding the US presidential election has shifted investor sentiment positively for 2024. The US Dollar Index jumped to 104.94 late Friday, up from around 103.43 earlier in the week following Republican presidential nominee Donald Trump’s victory over Democrat Kamala Harris.
"Market players are optimistic that a Trump victory and Republican Senate control will lead to pro-growth policies, such as tax cuts, increased domestic energy investment, and deregulation," stated Lindsey Piegza, Chief Economist at Stifel. As of late Friday, ballot counting was still ongoing to determine control over the House of Representatives. Ryan Field, Global Macro Strategist at Oxford Economics, remarked, "Current trends in the labor market suggest that US monetary policy is already somewhat restrictive.
If Republicans see a clean sweep in the elections, it could lead to heightened inflationary pressures, delaying Federal Reserve rate cuts rather than stopping them completely." Thursday saw the Federal Reserve reduce interest rates by 25 basis points, now at 4.5% to 4.75%. The FedWatch Tool indicated a 65% chance of another rate reduction of similar magnitude in December. The US two-year Treasury yield closed near 4.25% on Friday, reflecting a rise from the previous week, influenced by inflationary concerns within the government bond market..