Wall Street extends rally from Trump victory, Fed decision awaited

By Lisa Pauline Mattackal and Ankika Biswas

(Reuters) -Wall Street's main indexes added to their gains on Thursday in the run-up to the Federal Reserve's interest-rate decision, extending a sharp rally sparked by Donald Trump's stunning comeback as U.S. president for a second time.

Traders have about fully priced in a 25-basis-point rate cut, but will keep a close watch on the central bank's commentary for clues on the future path of monetary easing.

Investor expectations that Trump would lower corporate taxes and loosen regulations had lifted all three major indexes in the previous session.

Adam Turnquist, Chief Technical Strategist for LPL Financial (NASDAQ:LPLA ) said it was the S&P 500 's best post-Election Day performance on record.

On Thursday too, all the three major indexes were trading near record highs, but going ahead much would depend on the central bank's rate-cut outlook.

Traders have trimmed their bets to just two rate cuts in 2025 on consistently robust economic data and after accounting for the chances of higher inflation stemming from Trump's proposed tariffs and government spending.

"(The election) could slow the Fed's cutting speed next year, I still think you cut today and in December by 25 basis points, and as you go into next year it turns into quarterly cuts," said Frank Rybinski, head of macro strategy at Aegon (NYSE:AEG ) Asset Management.

"But at the end of the day, the pendulum is shifting towards lower rates."

Treasury yields are hovering near multi-month highs, though the benchmark 10-year yield eased slightly. [US/]

Meanwhile, some of the Trump trades that surged after his sweeping victory gave back gains, with Trump Media & Technology dropping 20%.

After hitting a record high on Wednesday, Financials lost 1.4%, led by a 4.3% slide in JPMorgan Chase (NYSE:JPM ) , which also weighed on the Dow.

The small cap Russell 2000 slipped 0.1% in choppy trading, but was still at around three-year highs it touched in the last session.

Communication Services sector rose 1.6.%, while rate-sensitive industrials edged lower and energy lost 1%.

The Dow Jones Industrial Average fell 16.65 points, or 0.04%, to 43,713.28, the S&P 500 gained 36.38 points, or 0.61%, to 5,965.42 and the Nasdaq Composite gained 247.11 points, or 1.30%, to 19,230.57.

Data showed U.S. weekly jobless claims rose marginally last week, suggesting no material change in labor market conditions.

Focus is also on whether Republicans could win control of both houses of Congress, making it easier for Trump's policies to be enacted.

U.S.-listed shares of chip designer Arm Holdings (NASDAQ:ARM ) rose 6%, reversing early losses as its quarterly forecasts disappointed investors.

Warner Bros Discovery (NASDAQ:WBD ) soared 10.5% after a surprise third-quarter profit.

The VIX , Wall Street's "fear gauge," was trading at a six-week low.



Advancing issues outnumbered decliners by a 1.84-to-1 ratio on the NYSE and a 1.33-to-1 ratio on the Nasdaq.

The S&P 500 posted 45 new 52-week highs and three new lows while the Nasdaq Composite recorded 156 new highs and 59 new lows.

Source: Investing.com