U.S. stocks ended with mixed results as investors began to reassess the high valuations of equities amid new economic policies under President-elect Trump. The Dow Jones Industrial Average (DJI) dropped 220 points, or 0.50%, falling to 44,072.06 points. Meanwhile, the Nasdaq Composite rose slightly by 11.49 points, or 0.06%, to close at 19,310.26. The S&P 500 Index saw a minor decline of 4.06 points, or 0.07%, closing at 5,997.29.
Despite a strong performance in the prior session, with all three major indexes reaching record highs, investor focus has shifted to evaluating the implications of Trump's economic policies and the upcoming inflation data including the Consumer Price Index (CPI) and Producer Price Index (PPI).
Ed Yardeni, president of Yardeni Research, expressed optimism about Trump's economic policies, projecting that the S&P 500 could reach 10,000 points by 2030, a 66% increase. His bullish outlook is based on expectations of corporate tax cuts boosting U.S. company profits.
In cryptocurrency news, Bitcoin soared above $89,000, marking a record-high level. Meanwhile, investors are closely monitoring any policy changes from the new government, reminiscent of the market's reactions following Trump's 2016 election victory.
Citigroup analysts noted a surge in investor risk exposure to U.S. equities, the highest in three years, posing potential risks to the ongoing rally. Additionally, they are contemplating the inflationary impact of Trump's policies and its subsequent effect on the Federal Reserve's interest rate trajectory.
Kevin Thozet of Carmignac warned that if these economic policies trigger inflation, treasury yields could rise, potentially leading to adverse effects, particularly during a high valuation period for equities. Phillip Wool from Rayliant Global Advisors indicated concerns over potential trade tariffs, fiscal deficits, and the strength of the dollar influencing the Fed's pace of policy easing.
In corporate news, Nvidia (NVDA) is set to release its third-quarter results, with analysts holding a positive view due to the anticipated Blackwell supercycle. Expectations are high for Nvidia's growth, with new product lines potentially boosting revenue in the coming quarters.
Tesla (TSLA, Financial) has garnered attention with its stock surging nearly 9%, pushing its market cap past $1.1 trillion. Morgan Stanley highlighted a shift in investor sentiment towards Elon Musk and indicated further potential growth as Tesla expands beyond automotive into electric vehicles, autonomous driving, robotics, and renewable energy.
On the regulatory front, Apple (AAPL) faces scrutiny from the EU over potential violations of consumer protection laws related to geographic restrictions in its services. The company has already been fined for prior competition breaches, adding to regulatory challenges in the region.
The U.S. Commerce Department has reportedly instructed TSMC to halt the supply of advanced AI chips to Chinese clients, affecting 7nm and smaller node products used in AI servers.
Investor attention remains on inflation data scheduled for release this week, which could offer insights into the Federal Reserve's future rate decisions. Tesla has emerged as a key highlight in recent market activities.
