The Dow Hits New High: US Stocks Rise Amid Inflation Concerns and Trump Administration Appointments

The Dow Hits New High: US Stocks Rise Amid Inflation Concerns and Trump Administration AppointmentsUS stocks closed higher overnight, with the Dow Jones Industrial Average reaching a new record high, up 0.99%

The Dow Hits New High: US Stocks Rise Amid Inflation Concerns and Trump Administration Appointments

US stocks closed higher overnight, with the Dow Jones Industrial Average reaching a new record high, up 0.99%. The Nasdaq Composite gained 0.27%, and the S&P 500 rose 0.30%. However, several key factors are commanding market attention, including upcoming inflation data, the minutes from the Federal Reserve's latest monetary policy meeting, and the nomination of a new Treasury Secretary under the Trump administration.

With a shortened trading week ahead of Thanksgiving, investors are focusing on Wednesday's release of the October Personal Consumption Expenditures (PCE) price index. The PCE is the Fed's preferred inflation gauge, and the data will significantly influence the future direction of monetary policy. Additionally, the minutes from the Fed's most recent meeting will be released before Thanksgiving, providing further clues about the interest rate outlook.

Market expectations regarding the Fed's future monetary policy are divided. Citi's interest rate strategists believe the Fed should pause rate cuts, contradicting the bank's economists who still anticipate a 50-basis-point cut in Decembera view sharply contrasting with that of other Wall Street players. Fed official Kashkari stated that a December rate cut is a reasonable consideration, but the neutral rate may be higher, implying less policy constraint, and emphasized geopolitical risks as the primary concern for the economic outlook.

The Trump administration's cabinet picks and their potential impact on economic policy remain a focal point. Last Friday, Trump announced the nomination of Scott Bessent, founder of hedge fund KeySquare Group, as Treasury Secretary. This announcement triggered a positive market reaction, with investors generally believing Bessent might help mitigate some of Trump's more extreme protectionist policies, thus benefiting the stock market. XTB analyst Kathleen Brooks noted a drop in the dollar following the announcement, characterizing Bessent as an "antidote" to Trump's most extreme economic views.

The tech sector showed mixed performance. Many large-cap tech stocks rose, with Amazon exceeding a 2% gain and Apple, Meta, and Google all surpassing 1%. However, Nvidia, Netflix, and Tesla fell over 4%, 3%, and nearly 4%, respectively. Tesla's decline may be partly attributed to its exclusion from California's proposed electric vehicle purchase subsidy program.

Energy and chip stocks performed strongly. AMD surged over 15%, Plug Power rose over 14%, GlobalFoundries gained over 5%, JinkoSolar increased over 4%, and Daqo New Energy climbed over 3%. This robust performance reflects investor optimism toward energy transition and the semiconductor industry.

The gold market experienced a downturn, with spot gold prices plummeting over 3% and gold stocks generally declining. Companies like Coeur Mining, Harmony Gold, Eldorado Gold, and Anglogold Ashanti all saw declines exceeding 4%, 4%, 3%, and nearly 3%, respectively. The international gold price fell significantly, with COMEX gold futures dropping 3.16% to $2626.4 per ounce, and COMEX silver futures falling 3.15% to $30.35 per ounce.

Cryptocurrency-related stocks were also affected, with MicroStrategy's stock price falling over 4% following news of its approximately $5.4 billion purchase of 55,500 Bitcoins last week. Bitcoin itself dropped over 4%, falling below $94,000 and resulting in over 160,000 liquidations in the past 24 hours. MicroStrategy continued to decline over 3% in after-hours trading.

Chinese stocks listed on US exchanges (Chinese ADRs) saw the Nasdaq Golden Dragon China Index close up 0.44%, with mixed individual stock performance. Alibaba, Baidu, and New Oriental all exceeded 2% gains, while NIO, XPeng, and NetEase fell over 3%, 2%, and 1%, respectively.

In the oil market, WTI January crude oil futures fell $2.30 (3.23%) to $68.94 per barrel, while Brent January crude oil futures declined $2.16 (2.87%) to $73.01 per barrel. NYMEX December natural gas futures, however, rose 7.67% to $3.3690 per million British thermal units. The oil price drop may be linked to easing tensions in the Middle East.

Regarding the Middle East situation, reports suggest the US and France are planning to announce a ceasefire between Hezbollah and Israel within 36 hours. However, a State Department spokesperson stated that a ceasefire "has not been reached," although the gap in opinions between negotiating parties has "narrowed considerably." Israeli media reported that the Israeli National Security Cabinet will meet on the 26th to approve a ceasefire with Hezbollah. A senior Hamas official welcomed a potential ceasefire, although an official Hamas response is pending.

The G7 foreign ministers' meeting commenced in Italy on November 25th, focusing on Middle East issues, including the humanitarian crisis in Gaza, the situation in Lebanon, and the Israeli-Palestinian conflict. The Arab League Secretary-General and representatives from several Arab countries were invited. The meeting continues on the 26th to discuss the Russia-Ukraine conflict and is expected to produce a joint communiqu.

The White House announced that President Biden will attend Trump's inauguration. Barclays remains bullish on the S&P 500, forecasting a rise to 6600 by the end of next year. In summary, the US stock market exhibits a complex trajectory as Thanksgiving approaches, demanding close attention from market participants to inflation data, Federal Reserve policy, and geopolitical risks.