Washington and the Markets are Feeling the President-elect Effect

Published On Dec 19, 2024, 8:00 AM

The article discusses the impact of President-elect Donald Trump on financial markets and the Federal Reserve's recent actions. Fed Chair Jay Powell has indicated a cautious approach with high borrowing costs expected to remain for a longer period, following a quarter-point rate cut that surprised investors and led to a significant sell-off in the stock market. The S&P 500 experienced its worst response to a Fed announcement since 2001, and the outlook for future rate cuts has become uncertain. This environment poses challenges for Trump's economic agenda as he prepares to take office amid concerns over inflation and potential economic policies that could exacerbate it.

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Stock Forecasts

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Negative

Given the Federal Reserve's shift towards maintaining higher interest rates for an extended period, the outlook for stocks, particularly those in interest-sensitive sectors like technology and real estate, is negative. The sell-off indicates investor fear and a reevaluation of growth expectations under potentially restrictive monetary policy. Furthermore, uncertainty surrounding Trump's economic policies adds to market volatility.

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