Stocks Get Trump Boost to Close at All-Time Highs: Markets Wrap
(Bloomberg) -- A late-day rebound in technology companies helped drive stocks to all-time highs, extending an advance fueled by President Donald Trump’s call for lower oil prices and interest rates.
About 330 shares in the S&P 500 rose, with the benchmark topping the 6,100 milestone. A closely watched gauge of chipmakers trimmed most of a slide that exceeded 2% earlier in the session. Meantime, a drop in crude — which tends to ease concerns about inflation — pushed the policy-sensitive two-year yield down. In late hours, Texas Instruments Inc. gave a disappointing earnings forecast. Boeing Co. reported revenue that missed analyst estimates.
Trump said he would ask Saudi Arabia and other OPEC nations to “bring down the cost of oil” and reiterated his threat to use tariffs to bring manufacturing back to the US as he addressed world leaders in Davos. He said he would demand an immediate drop in rates. Separately, Trump said he signed executive actions related to cryptocurrency and artificial intelligence.
Traders eagerly anticipating fresh insights into Trump’s trade policies got a more moderate tone regarding tariffs, which helped “soothe investor nerves,” according to Fawad Razaqzada at City Index and Forex.com.
“Trump, rightly or wrongly, wants to see a positive supply shock in the energy sector,” said Neil Dutta at Renaissance Macro Research. “That in turn will bring down inflation expectations, which in turn, will bring down rates.”
The S&P 500 added 0.5%. The Nasdaq 100 rose 0.2%. The Dow Jones Industrial Average climbed 0.9%. A Bloomberg gauge of the “Magnificent Seven” gained 0.2%. The Philadelphia Stock Exchange Semiconductor Index fell 0.4%. The Russell 2000 added 0.5%.
Bitcoin wiped out earlier gains. The Bloomberg Dollar Spot Index slid 0.2%. The yen climbed, with the Bank of Japan expected to raise its benchmark rate Friday by the most in 18 years. The yield on 10-year Treasuries advanced three basis points to 4.65%.
“If Trump can enact pro-growth measures while inflationary pressures abate, a rotation into cyclicals, smaller-cap names, and non-US assets is likely to materialize,” said Hal Reynolds at Los Angeles Capital Management.
However, given the heightened levels of policy risk, the firm’s “Dynamic Alpha Stock Selection Model” continues to slightly prefer larger cap companies across the globe whose strong returns can be justified by their fundamentals.
To James Demmert at Main Street Research, the stock market is in a “calm before the storm mode” ahead of next week’s Federal Reserve decision press conference and the start of the big-tech earnings season — “both of which are likely to cause market volatility.”
Demmert sees any further consolidation or correction in stocks as an opportunity for investors.
“We are still early in the AI and technology-led business cycle and bull market, which is now roughly two years old, and may last for another five years,” he noted.
The S&P 500’s recent leg higher missed an important ingredient: inflows from big-money managers. For those betting on a further rally, that’s a welcome development.
A measure of aggregate positioning among rules-based and discretionary investors fell to a two-month low, according to Deutsche Bank AG’s data. And commodity trading advisors cut their long stock exposure to the level last seen in the aftermath of a market rout in August, data compiled by Goldman Sachs Group Inc.’s trading desk show.
From a contrarian perspective, such skepticism bodes well for stock-market bulls because it means more dry powder to buy equities down the road, should the biggest fears fail to materialize.
“We continue to expect near-term volatility,” said Mark Haefele at UBS Global Wealth Management. “But we also believe US equities have room to grind higher as growth momentum continues.”
Corporate Highlights:
Key events this week:
Some of the main moves in markets:
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Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Robert Brand, Julien Ponthus, Divya Patil, Catherine Bosley and Rob Verdonck.