US Stocks Churn as Trump Rally Takes a Breather: Markets Wrap

(Bloomberg) — US stock futures fluctuated as traders paused after a historic three-day surge in the S&P 500. Oil fell with Asian markets after China’s stimulus disappointed investors.

S&P 500 contracts were little changed while Treasuries advanced, with the 10-year yield dropping one basis point to 4.31% following a two-day whiplash. Markets are coming off a blockbuster run, with the US equity benchmark up 4.3% so far the week, which would mark the best performance in a year if the gains were to hold.

Investors have piled into stocks, spurred on by expectations that Donald Trump’s economic policies to cut tax rates and support American industry will drive corporate profits higher. About $20 billion flowed into US equity funds on Wednesday, the day of Trump’s win, for the biggest daily addition in five months, according to Bank of America Corp. strategists. 

“To me, there is little alternative to the US,” said Marija Veitmane, a senior multi-asset strategist at State Street Global Markets. “The US is already the best performing equity market globally and we expect that outperformance to continue. US companies are the most profitable and likely to remain so, helped by the potential for lower taxes and less stringent regulation.”

In China, stocks and the yuan declined after Beijing authorities announced a total 10 trillion yuan ($1.4 trillion) program to refinance local government debt, signaling investors weren’t impressed with the latest support measures.

The disappointment reverberated across markets as European stocks swung from gains to losses, led by declines in China-sensitive sectors such as mining, luxury and autos. Brent dipped below $75 a barrel, while West Texas Intermediate slipped toward $71.

Beijing’s measures “look like it is just a debt swap, which is frankly not going to be that exciting for markets,” said Bernie Ahkong, global multi-strategy alpha chief investment officer at UBS O’Connor. “The big factor between now and the end of the year is if we are going to get some incremental stimulus from the consumer side.”

Friday’s moves follow a cross-asset rally on Thursday that was supported by a quarter-point interest rate cut by the Federal Reserve. Chair Jerome Powell pointed to the strength of the US economy and said he doesn’t rule “out or in” a December rate cut. 

Powell added the election will have no effect on policy in the near term, and said he would not step aside if asked by Trump. Traders are betting on 82 basis points of Fed easing by September 2025.

After an initial stampede into “Trump Trades,” investors in some asset classes are tapering their enthusiasm as they question whether he will push through his ambitious tariff proposals as US president.

“Even with red majorities across Congress, it’s likely that these policy actions will take time,” said James Athey, fund manager at Marlborough Investment Management. “That might make significant further gains in the short term a little harder to come by.”

Corporate Highlights:

• Cartier owner Richemont’s profit slumped as the Swiss luxury group’s watchmaking division suffered from falling demand in China.
• Boeing Co. Chief Executive Officer Kelly Ortberg said the company would pay employees who were put on mandatory leave during the disruption at its Seattle manufacturing hub.
• Airbnb Inc shares dropped 5% in premarket trading after the home-rental company reported third-quarter results, with analysts flagging the impact of marketing and product development investments on margins.
• Doximity Inc rose as much as 45% in early trading as the health-care software firm’s roll-out of the client portal served as a catalyst for higher full-year revenue and Ebitda forecast.

Some of the main moves in markets:

 Stocks

• S&P 500 futures were little changed as of 8:30 a.m. New York time
• Nasdaq 100 futures fell 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 fell 0.5%
• The MSCI World Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%
• The euro fell 0.4% to $1.0760
• The British pound fell 0.4% to $1.2938
• The Japanese yen rose 0.2% to 152.65 per dollar

Cryptocurrencies

• Bitcoin was little changed at $75,973.42
• Ether rose 1.3% to $2,931.26

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.31%
• Germany’s 10-year yield declined five basis points to 2.40%
• Britain’s 10-year yield declined four basis points to 4.45%

Commodities

• West Texas Intermediate crude fell 1.6% to $71.20 a barrel
• Spot gold fell 0.4% to $2,694.92 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Margaryta Kirakosian, Sujata Rao, James Hirai and Subrat Patnaik.

©2024 Bloomberg L.P.