Financial markets gave investors a lot to ponder during the Thanksgiving holiday-shortened week.
US stocks closed out the week at record highs on Friday, propelled by technology stocks, while Treasury yields declined and the dollar slipped, reversing eight straight weeks of gains.
There was plenty of good news for markets. Wall Street was optimistic about President-elect Donald Trump’s Treasury Secretary pick, hedge fund executive Scott Bessent, and the possibility of more business-friendly conditions after Inauguration Day.
“This is the exact pick the market wanted,” Ed Mills, a Washington policy analyst at Raymond James, said to Yahoo Finance about Bessent.
Other good news included stable inflation numbers, decent consumer sentiment, and a solid start to the holiday shopping season as consumers took advantage of discounts on electronics and clothing.
The National Retail Federation estimates total holiday spending in November and December will reach as much as $989 billion.
“It’s become a social activity, and I think that’s why we’re seeing some uptick in mall traffic,” former LVMH chair Pauline Brown said.
R.J. Hottovy, head of analytical research at Placer.ai, added, “We’re starting to see a bit of a comeback in those door-busters we saw once upon a time.”
However, tariff talk added uncertainty back into markets, particularly with Trump’s pledge to impose 25% tariffs on all goods coming into the US from Canada and Mexico on day one of his administration and an additional 10% tariff on goods from China.
Trump wrote the tariffs on Mexico and Canada will take effect if the two countries don’t take strong action to clamp down on illegal immigration and illicit drug flows.
“I’m not a fan of broad-based tariffs — they make me really uncomfortable and nervous,” Moody’s Analytics chief economist Mark Zandi said about concerns over a broader global trade war erupting and the potential inflationary effects.
“It will not be good for the consumer,” former Gap CEO Mickey Drexler added.
Still, Trump’s nomination of Scott Bessent to the top Treasury post raised hopes that tariffs will be more measured. And with only 21 trading days left in the year, analysts, investors, and market watchers expect the good news for stocks to continue, barring any unforeseen events.
Year to date, the Dow Jones Industrial Average (^DJI) has risen 19%, while the S&P 500 (^GSPC) has gained 26% and the tech-heavy Nasdaq Composite (^IXIC) has gained 28%.
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