The stock market saw mixed results today following the latest Consumer Price Index (CPI) inflation report. The Dow Jones Industrial Average rose, while the S&P 500 edged slightly higher and the Nasdaq closed lower. The 2024 election has significantly boosted U.S. stocks, propelling them to new highs.
Since the Monday prior to the election, the S&P 500 has increased nearly 5%, though it’s noteworthy that the FTSE All-World ex-U.S. index has declined by 2.6% during the same period. As BTIG Chief Market Technician Jonathan Krinsky notes, U.S. stocks appear bullish and might be the primary focus for investors. However, he cautions that the upcoming weeks will be crucial in determining whether global stocks are signaling broader economic issues or merely reacting temporarily.
Contributing to the current market environment are valuation concerns, highlighted by Societe Generale’s Andrew Lapthorne. He points out that U.S. equities have become expensive, with a 22x forward price-to-earnings (P/E) ratio and a dividend yield of 1.2%, reminiscent of the levels seen during the February 2000 bubble.
Mixed market reactions to CPI report
The recent uptick in speculative assets like Bitcoin and other cryptocurrencies has added to the market’s frothy conditions. Despite valuation worries, the market might maintain its momentum during the traditionally strong end-of-year period. However, there are growing concerns that the market could face a downturn if the Trump administration’s future policies fail to meet the current optimistic expectations.
As the market digests the latest CPI report and its implications for future Federal Reserve actions, key stocks like Tesla, Spotify, Nvidia, Cava, and Rivian continue to capture investor attention due to their volatility and movement. The day’s trading also reflected broader economic uncertainties. Oil prices rose slightly on concerns about future demand, while gold extended its losses into a fourth consecutive session.
The U.S. dollar surged to its highest level in a year, and the Treasury yield curve spread increased, suggesting possible future rate cuts by the Fed. In summary, while U.S. stocks have experienced a post-election boost, the market remains vigilant of global economic indicators and speculative asset behaviors as it navigates the forthcoming weeks.
