The Dow surged on Monday to build on the roaring post-election rally, but the Nasdaq struggled as the “Trump trade” took the spotlight in markets with shares of Tesla (TSLA) jumping for a fifth straight session.
The Dow Jones Industrial Average (^DJI) led the way higher, up over 400 points, or about 1%, while the S&P 500 (^GSPC) moved up 0.2%. Both indexes are coming off their best week of the year, capped by record highs.
Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) hovered near the flatline as Nvidia (NVDA), Apple (AAPL), and Meta (META) lagged.
Small-cap stocks also rose with the Russel 2,000 (^RUT) at its highest level since November 2021.
Markets opened on Veterans Day with stocks at all-time highs thanks in large part to expectations for lower corporate taxes and deregulation from President-elect Donald Trump. The Federal Reserve’s latest interest rate cut also buoyed the mood.
Bitcoin (BTC-USD) hit a record, trading just a stone’s throw away from $85,000 amid high hopes for a crypto-friendly Trump administration and Congress. Dogecoin (DOGE-USD) and other smaller digital currencies also gained as traders bet on Trump’s promise to make the US a leading light in crypto.
That optimism also helped push crypto-related stocks higher, building on sharp gains booked since the election. Trading platform provider Coinbase (COIN) rose over 13% early Monday, while shares in peer Robinhood (HOOD) put on over 8%.
Tesla stock — another “Trump trade” hot spot — continued to climb, up 10%. The electric vehicle maker’s stock hit its highest close in over two years on Friday, topping $1 trillion in market value amid optimism over CEO Elon Musk’s relationship with the incoming president.
At the same time, doubts about the stock market rally’s staying power are starting to emerge. Wall Street is waiting for October consumer inflation data on Wednesday for pointers to the path of rates. Last week, Chair Jerome Powell stayed mum on the Fed’s thinking in the face of Trump policies that could keep price pressures in play.
One worry is that Trump’s proposed tariffs could feed through into higher inflation, prompting the Fed to scale back on rate cuts. Minneapolis Fed President Neel Kashkari said on Sunday that if there is an escalating “tit-for-tat” reaction by other countries, policymakers will “have to wait and see.”
Traders now see a 65% chance that the Fed lowers rates by another quarter percentage point in December, per the CME FedWatch Tool. A week ago, before the presidential election, the odds stood at almost 80%.
