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[New York Stock Market-Weekly Outlook] The 'Trump Rally' Ends Quickly...The Focus is on the Fed
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- This week, investors in the New York stock market are expected to focus on the interest rate outlook of the U.S. Federal Reserve (Fed).
- The strong rally in the New York stock market triggered by Trump's election did not last long, and investors are focusing on economic outlook and Fed's interest rate path.
- It was pointed out that the possibility of the Fed's interest rate hike being much lower than the current level exists, which could significantly impact the direction of the U.S. economy.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
(New York=Yonhap News) Im Haram, Yonhap Infomax Special Correspondent = This week (November 18~November 22), investors in the New York stock market are expected to focus on the interest rate outlook of the U.S. Federal Reserve (Fed·연준).
The strong rally in the New York stock market triggered by Donald Trump's election as U.S. president did not last long.
Last week, the Dow Jones Industrial Average fell by 1.24%%. The S&P 500 index fell by 2.08%% for the week. The Nasdaq index dropped by 3.15%% for the week.
The New York stock market, which welcomed Trump's election as friendly due to expectations of uncertainty reduction, has cooled down internally.
The Trump administration has begun appointing key personnel for each department.
As the expectations for 'Trump 2.0' fade, investors are searching for stability and examining whether the new economic conditions will be favorable to the stock market.
The Trump administration's policies on taxes and immigration could reignite inflation.
Also, the Trump administration's policies could change the economic outlook in a different direction than expected.
What investors are most curious about is how the new economic outlook might affect the Fed's interest rate path.
The Fed has already entered the path of interest rate hikes, and if disinflation continues, it is expected to steadily raise rates. However, the Fed's strategy in the Trump era is complex.
Last week, Fed Chair Jerome Powell indicated that the Fed does not need to rush to raise the base rate.
He attended an event in Texas and stated, "There is no signal that the U.S. economy needs a rate hike," he said.
Other Fed members also agreed with this view.
In an interview with a foreign media outlet, Austin Goolsbee, president of the Chicago Federal Reserve Bank, known as a representative 'dove' (a pro-communication advocate) within the Fed, said, "In the next 12 to 18 months, we will proceed towards our inflation target of 2%%, and the rate will be much lower than the current level," while also stating that there is no need to rush to lower the rate to that level.
Susan Collins, president of the Boston Fed, said in an interview with a foreign media outlet that she does not rule out the possibility of a rate hike at the next Federal Open Market Committee (FOMC) meeting in December, but it is not confirmed.
According to the CME FedWatch, the probability of the Fed raising rates at the December FOMC meeting is almost 40%%.
If the Fed's rate hike path becomes more uncertain, the market is expected to experience significant disappointment. High interest rates are a negative factor for the stock market.
The New York stock market has already seen a strong rally in anticipation of the Fed's rate hike.
If the rate path is readjusted, U.S. bond rates could rise even higher than the current level. The 10-year U.S. Treasury yield has already risen to 4.44%%.
Investors are expected to scrutinize the Fed's rate hike speed more closely due to the statements of Fed officials scheduled for this week.
On the other hand, this week, Nvidia will announce its earnings. There is anticipation whether Nvidia's performance will once again trigger an artificial intelligence (AI) rally.
Additionally, the Purchasing Managers' Index (PMI), which can gauge the manufacturing and service industry conditions in the U.S., will be released. Regional Federal Reserve Banks will announce manufacturing indices, consumer sentiment indices, economic activity indices, housing price indices, etc.
