From Investing.com: 2024-11-18 02:11:09

A U.S. stock rally following Trump’s election win is now faltering as concerns over inflation and uncertainty surrounding his policies weigh on investors. The S&P 500 dropped 2% last week, erasing gains from the post-election surge. Trump’s plans for tariffs and cabinet picks have spooked pharmaceutical and government contractor stocks.

Rising yields, driven in part by Trump’s policies, pose a threat to the stock market. The benchmark 10-year yield surged about 90 basis points since September, spurring fears of a tighter monetary environment. Fed Chair Powell’s comments on solid economic growth and inflation pushed bond yields higher, further dampening stock market sentiment.

Uncertainty over the timeline and impact of Trump’s policies has grown, with shares of Pfizer, Moderna, and other drugmakers falling due to his appointment of a vaccine skeptic. Defense and government contractor stocks also took a hit following concerns over spending cuts from a new efficiency entity led by Elon Musk. Policy ambiguity has led some investors to sell off assets preemptively.

Despite the market challenges, some “Trump trades” like Tesla and Bitcoin are still seeing strong gains. Tesla’s stock has risen 28% since the election, while Bitcoin was up over 30% late last week. With stocks historically performing well at year-end, optimism remains fueled by strong corporate earnings and a healthy growth environment. Ross Mayfield of Baird Private Wealth Management sees positive factors working in the market’s favor.



Read more at Investing.com: Analysis-Headwinds hit Trump-fueled rally in US stocks By Reuters