Now that stock market indices are at new all-time highs or close to it, investors widely expected more upside from here. This complacency may prove costly.
On Wednesday’s trade, the S&P 500 (SPY) snapped its seven-day winning streak. Markets reacted negatively to U.S. core inflation rising by 0.3% in October, or 2.8% annually. This is up from 2.7% in September. Investors now need to re-consider the Fed’s stance on easing interest rates. They should expect Fed Chair Jerome Powell to walk back on the central bank’s dovish policy.
Bond prices rose, pushing Treasury yields lower. This suggests uncertainties ahead on the Fed’s rate decision for December.
Ahead of Trump's return to the White House in January 2025, stock markets are not speculating much on tariffs against Canada, China, and Mexico. Investors might assume that the average U.S. consumer would face higher prices if the U.S. imposes tariffs on its trading partners. Still, a few stocks reacted to the risk. General Motors (GM) gave back is $5.00 weekly rally, closing at $55.50 on Wednesday.
Cyclical miners continued to trade lower. Markets expect global trade to be slower, with economic slowdown risks rising. Freeport-McMoran (FCX), Vale (VALE), BHP Group (BHP), and Rio Tinto (RIO) are among the resource stocks pulling back.
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