The first full trading week of November will have consequences for traders both now and well into the future. Early on Wednesday morning, Donald Trump was declared the next president of the United States, and his proposed policies will have a significant impact on the market and the economy.
His election is seen as a boon for crypto, as Bitcoin prices soared to almost $77,000 on Wednesday. Bank, energy and other stocks also performed well this week with the Dow itself opening up over 1,300 points on Wednesday morning. Trump’s election is seen as a win for business as he is likely to rollback or ease existing regulations.
However, he is also expected to impose tariffs on goods from China and other countries, which are expected to have an inflationary effect. He is also expected to push for a reduction in the corporate tax rate from 21 percent to 15 percent, which may also sap the government of revenue.
If inflation does get going again, it could significantly impact the Fed’s plan to reduce interest rates in 2025. On Thursday, the Fed voted to lower the funds rate by 25 basis points and did not comment on how changes in the White House might influence its policy decisions going forward.
Jerome Powell also said during the Fed press conference on Thursday that he would not step down from his position if asked by Trump. He also reiterated that he couldn’t be fired or otherwise removed if he refused.
While the election certainly played the biggest role in shaping market sentiment this week, it was not the only major event on the calendar. On Tuesday, the ISM Services PMI was released and came in at 56, which was higher than the expected 53.8. It means that the service sector is still in a period of expansion, which could continue to put upward pressure on prices.
On Thursday, unemployment claims data for the past seven days was made public, and it revealed that 221,000 people filed for benefits over the last week. This was compared to an expected 223,000 claims and 218,000 claims filed in the previous tracking period.
Finally, on Friday, the University of Michigan released its consumer confidence and inflation expectation data. Consumer confidence came in at 73 compared to an expected 71 while respondents said that inflation would be at 2.6 percent 12 months from now.
The Dow finished up nearly 5 percent this week to close at 43,988, which was an increase of 2,082 points. The low of the week occurred on Monday when the market dipped to 41,679 while the high was made at 44,142 on Friday afternoon. The Dow is up over 16 percent year-to-date (YTD) after this week’s post-Trump bounce.
The Nasdaq rose 5.9 percent this week to close at 19,286, which was an increase of 1,073 points for the last five trading days. On Monday, the market reached its low of the week at 18,163 while it made its high of the week on 19,310 late on Friday afternoon.
Finally, the S&P 500 also finished significantly higher this week gaining 4.68 percent to close at 5,995.
In international news, Australia decided to keep its interest rate steady at 4.35 percent on Monday night. On Tuesday, New Zealand announced that its unemployment rate was 4.8 percent while there was a negative .5 percent change in the country’s employment numbers. On Thursday, Great Britain announced that it would lower its interest rate by 25 basis points to 4.75 percent.
Next week features a number of key reports in the United States as inflation data will be revealed on Wednesday. On Thursday, unemployment claims data as well as the PPI report will be released while retail sales data for October will be released on Friday. In addition, Jerome Powell is scheduled to speak on Thursday afternoon in what should be a closely followed speech.