Market Record Highs: How the S&P 500 and Dow Jones Rewrote History on Black Friday

The S&P 500 and Dow Jones Industrial Average once again pleased investors on Black Friday, closing at record highs. The main drivers of growth were tech giants like Nvidia and Tesla, as well as a rebound in retail trading caused by the start of the holiday shopping season.

Tech Sector as a Driver

The information technology sector was a key driver of growth for the S&P 500 and Dow Jones. Leading companies showed impressive results: Nvidia shares added 2%, and Tesla rose 3.7%. These successes helped the benchmark S&P 500 index and the blue chips of the Dow confidently end the shortened trading session.

In addition, the industrial sector made a significant contribution to the growth of the indices, confirming the stability and diversification of the American economy.

E-commerce breaks records

The holiday shopping season started with records. According to Adobe Analytics, consumers set a new high, spending $ 10.8 billion on online shopping. This is 9.9% more than on Black Friday last year.

The retail sector also responded to the shopping activity with rising shares. Thus, Target shares added 1.7%, and Macy's rose by 1.8%. This underscores investors' optimism regarding demand for holiday goods.

Indices update historical maximums

The key indices' indicators speak for themselves:

• The S&P 500 rose by 0.56%, ending the day at 6032.44 points, which exceeded the previous intraday record of 6025.42 points;

• The Dow Jones Industrial Average rose by 0.42%, reaching 44910.65 points;

• The Nasdaq added 0.83%, closing at 19218.17 points;

• The Russell 2000, an index of small companies, rose 1.48%, reaching a new record high at the beginning of the week.

Semiconductors regain ground

After a brief decline the day before, shares of chip makers have confidently recovered. The Philadelphia SE semiconductor index rose by 1.5%, which became another positive signal for the market.

Black Friday not only boosted consumer activity, but also demonstrated once again the power of the tech and industrial sectors to drive sustainable economic growth. The holiday season has just begun, and the market faces new challenges and possibly new records.

Small-cap gains as bond yields fall

The Russell 2000 small-cap index rose 0.4%, helped by Treasury yields falling from multi-month highs earlier this year. That bolstered small-cap stocks that are sensitive to changes in economic policy and market liquidity.

Wednesday Brings a Decline, but No Anxiety

Wall Street's major indexes closed slightly lower on the Wednesday before Thanksgiving, led by the Nasdaq, which was weighed down by a tech decline, driven mainly by investor concerns that the Federal Reserve may slow the pace of rate cuts due to persistently high inflation data.

This short-term adjustment reflects the ongoing uncertainty in the market, where every economic news item becomes a catalyst for changes in market participants' expectations.

Political Factor: How Trump Affected the Market

Donald Trump's victory in the recent presidential election, as well as the Republican Party's continued control of Congress, have given new impetus to the stock market. Market participants are pinning their hopes on Trump's policies for increased support for businesses, which, according to analysts, could accelerate economic growth and increase corporate profits.

However, this scenario also has a downside. Experts fear that active support for the economy could lead to higher inflation, which would force the Fed to take a more cautious approach to rate cuts. This, in turn, could slow the pace of economic growth and put pressure on global markets.

What do they expect from the Fed?

Markets are closely watching the actions of the Federal Reserve. According to FedWatch CME Group, traders believe that the Fed will cut the interest rate by 25 basis points at its December meeting. However, the regulator's further actions raise more questions, as analysts suggest that the rate cuts may be suspended in January.

The Path Forward: Cautious Optimism

The market is in a holding pattern, balancing hopes for business support and concerns about inflationary pressures. The situation remains ambiguous, and each new Fed decision or policy initiative will play a key role in shaping trends in the coming months.

Cryptocurrency Sector on the Rise: Bitcoin Growth Revives Stocks

Cryptocurrency stocks demonstrated confident growth thanks to the rise in the Bitcoin price. The sector's leading companies did not remain on the sidelines: MARA Holdings shares added 1.9%, confirming the growing interest in digital assets. This rise was part of the overall optimistic mood in the market.

Disappointment for Applied Therapeutics

Not all companies were able to share in the market's success. Applied Therapeutics experienced a real collapse, losing 76% of its value. The sharp drop was caused by the FDA's refusal to approve their drug for a rare genetic metabolic disease. The blow was a significant setback for the company, which had high hopes for the drug.

NYSE Advances Dominate

The market continues to show positive trends. On the New York Stock Exchange (NYSE), advancing stocks significantly outnumbered declining ones by 2.46 to 1. In addition, there were 386 new highs compared to 63 new lows, indicating stable market momentum.

New High for the S&P 500

The S&P 500 index confirmed its strength, recording 31 new 52-week highs and no new lows. Meanwhile, the Nasdaq Composite posted 116 new highs and 31 new lows, confirming the appeal of technology for investors.

Trading Volume: A Shortened Week, but an Active Market

Despite the shortened trading week, trading volume on U.S. exchanges reached 8.15 billion shares, which, although lower than the average of 15 billion for full trading sessions over the past 20 days, demonstrates steady interest from market participants.

Markets Revise Rate Forecasts: 2024 Easing

Wall Street has begun to gradually adjust its expectations for future interest rate moves, reflecting a more cautious approach by the Federal Reserve to further easing. Fed rate futures show investors are now betting on a rate cut to 3.8% by the end of next year, up from the current range of 4.5% to 4.75%. That estimate is 100 basis points higher than expected in September, suggesting a more optimistic view of the economy.

Powell Remains Cautious: No Rush to Cut Rates

Fed Chairman Jerome Powell said earlier this month that the Fed is in no rush to cut interest rates despite stable inflation and a strong labor market. Powell noted that the economy does not yet need aggressive rate cuts, as inflation remains above the 2% target, which means that further efforts from the regulator are needed.

Questions about the future of the Fed's policy

In the current situation, analysts have begun to wonder how much further easing of monetary policy is really necessary. Samir Samana, senior global market strategist at the Wells Fargo Investment Institute, noted that the Fed is beginning to discuss out loud how much more easing the economy needs, especially given the strength of the U.S. labor market.

Rate cut expectations in December

However, investors are still betting on a rate cut in the near future. As of Wednesday evening, the chance that the Federal Reserve would cut rates by 25 basis points at its Dec. 17-18 meeting was about 70%, according to CME FedWatch data.

This suggests that markets are still expecting moderate steps from the central bank in the coming months, although the pace of rate cuts may be less aggressive than previously forecast.

Amid the current economic uncertainty, Wall Street is adjusting its expectations, and the Fed appears to be continuing its more cautious strategy on monetary policy. Investors are closely watching each statement from the central bank to adjust their positions in line with the new economic reality.

The dollar is recovering: Trump's influence and Japanese policy

On Monday, the dollar began to rise, partially recouping losses from the previous week. One factor that contributed to the strengthening of the American currency was unexpected words of support from the US President-elect Donald Trump.

Trump and his new position on the dollar

Trump has previously spoken out in favor of a weaker dollar, viewing it as a tool to reduce the US trade deficit. However, his latest comments showed that he has changed his position, hinting that he will not put pressure on the currency. This statement was taken by the market as a signal that the Trump administration will not continue the policy of weakening the dollar, which contributed to its growth.

Chinese yuan suffers from dollar strengthening

Amid the strengthening dollar, the Chinese yuan felt pressure, falling to a three-month low against the US currency. The drop reflects the general sentiment in the markets, worried about the impact of the dollar's strengthening on other economies.

Japanese yen and rate hike predictions

The dollar also strengthened against the Japanese yen, rising 0.5% to reach 150.50 yen per dollar. This comes amid recent comments from Bank of Japan Governor Kazuo Ueda, who said the likelihood of an interest rate hike was "getting closer" if economic data is on track. The comments have reignited speculation about a possible policy shift in Japan.

Japanese Investment Growth and BOJ Rates

Investors also took note of data showing Japanese business investment rose a healthy 8.1% in the third quarter, bolstering expectations for a rate hike in Japan. Markets now price the chance of the BOJ raising rates by 0.25% at its December 18-19 meeting at 65%.

Comparison with Fed Actions

This is almost identical to the likelihood that the US Federal Reserve will cut rates by 0.25% at its December 18 meeting. Market expectations will be driven by the ISM and payroll data this week, which will give investors a clearer picture of the future course of monetary policy in both countries.

The dollar, therefore, continues to strengthen amid new political and economic cues. Expectations for policy changes in Japan and the US remain high, with markets focused on upcoming macroeconomic data.

US Jobs Outlook: Potential for Higher-Than-Expected Gain

US payrolls are expected to increase by 195,000 in November, in line with the market consensus. However, the wide range of estimates — from 160,000 to 270,000 — leaves room for a surprise gain. Some analysts, including those at JPMorgan, suggest the figure could reach 270,000, given the recovery from the hurricanes and the end of the strikes, which could add nearly 90,000 jobs.

Risks of rising unemployment

However, despite this increase, the US unemployment rate is forecast to rise to 4.2%, which would bring it closer to the Federal Reserve's (Fed) target of 4.4%. This could leave the door open for a rate cut in December, an important signal for financial markets.

ECB on the brink of change: what investors expect

For the European Central Bank (ECB), a 25 basis point rate cut at its December 12 meeting is seen as a minimum measure. However, investors are also pricing in a 21% chance of a 50 basis point rate cut. Compared to 3.75% for the Fed, the market is pricing in 1.6% as the ECB's lower limit, indicating greater flexibility in monetary policy in Europe compared to the US.

French political instability and risks for bonds

In parallel with economic expectations, the political situation in France is also weighing on financial markets. The risk of a no-confidence vote, which has become more likely after the far-right National Assembly party stepped up pressure on the government, could seriously undermine stability. It also casts doubt on the budget recovery, with the deficit potentially reaching 6% of the country's GDP.

Political instability could make borrowing significantly more expensive for France than for other EU countries, including Greece, which could make it more difficult for the government to finance itself and increase its debt burden.

Global markets remain under pressure from variable factors, from economic forecasts in the US and Europe to political instability in France. In the coming weeks, economists and investors will be watching closely for any new signals that could affect central bank decisions and the stability of financial systems.