The U.S. stock market exhibited mixed performance with the Dow Jones Industrial Average (DJIA) declining by 90.43 points or 0.21% to settle at 43,354.56. Meanwhile, the Nasdaq Composite gained 12.47 points, or 0.07%, ending at 18,692.59, and the S&P 500 dropped slightly by 2.01 points or 0.03%, closing at 5,868.61. Tesla (TSLA, Financial) saw a surge of over 6% following reports of potential regulatory relaxations for autonomous vehicles from President-elect Trump's administration.
Investors are keeping a close eye on post-election stock market trends. Last week, the market gave back its election gains with the Dow Jones down 1.2%, the S&P 500 decreasing 2.1%, and the Nasdaq falling 3.2% over the week.
Morgan Stanley strategist Michael Wilson expressed optimism about the S&P 500's outlook through 2025, expecting an increase to around 6,500 points by the end of next year, driven by economic growth and potential Federal Reserve rate cuts. Previously, Wilson projected the index to reach 5,400 by mid-2025, but it has already surpassed 6,000. Morgan Stanley now sets its bull market target for next year at 7,400 points.
Concerns about the Federal Reserve's rate-cutting strategy remain, especially after Chairman Jerome Powell indicated a reluctance to cut rates due to strong economic and labor market conditions, leading to last week's stock sell-off. The CME Group's FedWatch Tool suggests most investors anticipate the federal funds rate to be between 4.25% and 4.50% by year-end.
Nomura Securities no longer expects a rate cut at the Fed's December meeting, marking the first global brokerage to suggest a pause in the Fed's rate-cutting cycle following Trump's election win. The firm now predicts two further cuts in March and June 2025, keeping the federal funds rate forecast at 4.125% for next year.
This week, the market is also focusing on important earnings reports, including Nvidia (NVDA), which will release its results on Wednesday. The company's Blackwell AI chip reportedly faces overheating issues in servers, causing concerns among clients like Google and Microsoft.
Other significant companies reporting this week include Palo Alto Networks, Walmart, Target, and Ross Stores. So far, 93% of the S&P 500 companies have reported earnings, with 75% exceeding EPS expectations and 61% surpassing revenue estimates.
