Post-election stock market rally fades as dollar surges

Wall Street experienced a sharp reality check over the week as the post-election rally following Donald Trump’s presidential election victory unraveled. Major indices fell in unison as investors reassessed the economic outlook in light of potential policy shifts. 

Republicans secured a majority in the House of Representatives, marking a GOP sweep of Washington, D.C., and giving the incoming Trump administration significant leeway to enact  economic policy.  

Uncertainty looms large with the specter of higher tariffs and potential cuts to government spending, particularly given Trump’s plan for the creation of the Department of Government Efficiency (DOGE), triggering turbulence across various sectors and markets. 

In economic data, consumer inflation rose as expected in October, but producer inflation surpassed forecasts, raising some fresh concerns about the durability of the disinflationary trend heading into the year’s final quarter. 

Risk sentiment took a deeper hit on Thursday and Friday after Federal Reserve Chair Jerome Powell delivered unexpectedly hawkish remarks. Powell indicated the Fed is in “no hurry to lower rates,” citing the strength of the U.S. economy, which allows policymakers to proceed “carefully.”