The past week was the best week for the US stock market this year, with all three of the most followed stock indexes closing at all-time highs.
The S&P 500 index, which follows large companies, set a new record, ending at 5,995.5 points.
During the trading day, the S&P 500 index traded above 6,000 points for the first time, but ended up at 5,995.5 points. It was the stock index’s 50th all-time high closing price this year.
On Friday, the S&P 500 index rose 0.4 percent, and during the whole week the index rose 4.7 percent. The last time such a good week was seen was at the beginning of November in 2023.
All 11 sectors of the stock index rose during the week.
The Dow Jones stock index, which tracks 30 large companies, rose 0.6 percent and the technology-focused Nasdaq stock index rose 0.1 percent.
Trump’s win started a price rally
The price rise started on Wednesday, after it was revealed that the former president Donald Trump won the presidential election clearly.
The weekly increase of the Dow Jones index was 4.6 percent and the Nasdaq 5.7 percent. The price rise was extensive, as the Russell 2000 index, which tracks small companies, rose 8.6 percent in a week.
The expected policies of Trump and the Republicans are expected to benefit especially small businesses with less regulation, increased mergers and acquisitions and lower taxes.
electric car company Tesla’s the share price rose by 29 percent during the week. The main owner and CEO of the company Elon Musk campaigned fiercely for Trump and it is expected that he will get some kind of role in the administration and Tesla will also benefit from it. Tesla’s market value rose above one billion dollars for the first time in more than two years.
For Trump, the strong stock market rally was an additional reward after it became clear that he had received a strong mandate for his presidency. Republicans look set to win majorities in both the Senate and the House of Representatives. However, the election result of the House of Representatives has not yet been decided.
Trump also won the majority of the vote nationwide for the first time.
The Fed is holding its line
Share prices also rose on Thursday by the Federal Reserve’s expected interest rate cut. The central bank’s view is that the US economy is on a strong footing and the softness seen in employment earlier this year has diminished.
The central bank is expected to continue with the current line, where interest rates are gradually lowered to a more normal level due to falling inflation and strong employment.
Governor of the central bank Jerome Powell said he would not resign even if Trump asked him to as president. Trump has said that he thinks the president should have a say in the central bank’s interest rate policy, but Powell hinted that he defends the central bank’s independence.
Powell’s message was that the election rhetoric doesn’t matter, the central bank makes its own predictions about the economic situation based on the current information.
At the end of the week, there was still good news for the stock market, when the consumer confidence index of the University of Michigan rose more than expected. A poll conducted before the elections showed that the near future in particular is seen more positively than before.
Next week, the market will be more excited about the results of companies and October’s inflation figures, based on which the central bank Fed’s next move can be speculated on.
The Fed’s Open Market Committee will hold one more interest rate meeting this year in December. Next year’s first meeting will be in January, after the Trump administration has begun.