Daily E-mini S&P 500 Index
All 11 sectors of the S&P 500 posted gains, spearheaded by a 1.7% increase in consumer discretionary stocks. Technology stocks followed closely, rising 1.5%, reversing losses from earlier sessions. Nvidia surged 4%, lifting the Dow, Nasdaq, and S&P 500.
The positive session came after a rough start to the year, with the S&P 500 and Nasdaq closing lower for five consecutive sessions. This pattern diverged from the historical tendency for markets to rally in late December and early January. Despite Friday’s upward move, the major indexes were still poised for weekly losses of around 1%.
How Are Investors Responding to Trump’s Policy Agenda?
Market sentiment remains mixed as investors assess the potential economic impact of Trump’s policy proposals. With Republicans controlling Congress, Trump’s agenda could drive growth through corporate tax cuts and deregulation. However, policies on tariffs and immigration bring inflation concerns.
Analysts believe a clearer market direction could emerge by late January once the new administration begins executing pro-business initiatives. Michael Matousek of U.S. Global Investors noted that bullish sentiment may rise as policies solidify.
Interest Rate Outlook and Economic Signals
Economic data continues to reflect resilience, with manufacturing activity showing signs of recovery. This has dampened expectations for aggressive interest rate cuts by the Federal Reserve. The CME Group’s FedWatch Tool suggests traders anticipate the first rate cut around May.
Treasury yields remain elevated, with the 10-year yield holding above 4.5%, signaling persistent inflationary pressures.
