US markets continued to rally on Wednesday as investors continued to cheer President-elect Donald Trump’s nomination of Hedge Fund manager Scott Bessent as treasury secretary. Crude prices fell, as did the treasury yields, while the US Dollar weakened against peers.
The Dow Jones rose 1% or nearly 450 points, while the S&P 500 made a new high of 6,020 before closing below that level with gains of 0.3%. A mixed bag day for big tech meant that the Nasdaq Composite underperformed, although it closed with gains as well. The Smallcap-focused Russell 2000 index also ended 1.5% higher, making a new high of 2,466.
Bitcoin slipped after a surge toward $100,000 fizzled just shy of the historic level. Oil sank as Israel moved closer to a cease-fire with Hezbollah. The yield on 10-year Treasuries declined 14 basis points to 4.26%. The Bloomberg Dollar Spot Index fell 0.5%.
“Investors are viewing this nomination as one that will provide a Goldilocks scenario for Mr. Trump’s pro-business proposals,” said Matt Maley at Miller Tabak + Co.
A year-end rally will push the S&P 500 to 6,200 points, according to Goldman Sachs Group Inc.’s Scott Rubner. Retail euphoria is accelerating just as stocks enter their best seasonal trading pattern. Corporate demand for buybacks is also increasing, adding to the reasons why the rally could start in the coming days, Rubner said in a note to clients on Friday.
At RBC Capital Markets, Lori Calvasina says the S&P 500 is set to reach the 6,600 level by the end of 2025 due to what’s likely to be another year of solid economic and earnings growth, some political tailwinds, and additional relief on inflation.
Her team’s new price target “does bake in the idea that the S&P 500 will experience a 5-10% drawdown before too long.” Elevated positioning, recent froth in sentiment, and higher valuations leave the S&P 500 vulnerable to bad news and perhaps simply in need of a breather.
And Barclays Plc strategists expect further stock-market upside in 2025 amid constructive positioning and a solid macroeconomic backdrop, even though gains are set to slow from the breakneck pace seen this year and last.
The team led by Venu Krishna raised its S&P 500 year-end target to 6,600 from 6,500.
While the S&P 500 might be a long way away from fumbling a strong year, don’t get too optimistic about a strong, smooth finish to the year, according to Callie Cox at Ritholtz Wealth Management.
“Investors are especially upbeat right now, too. We all love a good collective mood before the holidays, but I’m worried we could get caught off guard by bad news,” she concluded.
US inflation figures this week that are seen showing stubborn price pressures will reinforce the Federal Reserve’s cautionary posture toward future interest-rate cuts.
The personal consumption expenditures price index excluding food and energy — the Fed’s preferred measure of underlying inflation — is projected to have risen by 0.3% in October from September, and by 2.8% from a year earlier, in what would be the largest advance since April.
Fed Bank of Chicago President Austan Goolsbee told Fox Business he foresees the central bank continuing to lower rates toward a stance that neither restricts nor promotes economic activity.
(With Inputs From Agencies.)