After a post-election risk-taking binge, stock investors sobered up this week as Jerome Powell’s go-slow message on interest-rate cuts cooled the Trump trade euphoria that drove Wall Street to records. With the world’s most important central banker in no hurry to ease monetary policy thanks to a still-robust labor market and strong economic data, bond yields once again rose and dragged stocks lower in their wake. Down 2% over five sessions, the S&P 500 erased half of its trough-to-peak gains since the election. Combined with losses in corporate credit and commodities, the week rounded out a pan-asset retreat that by one measure was the worst in 13 months. After all the cheering from Wall Street on Donald Trump’s behalf, worry may have begun to set in. The Republican’s fiscal agenda threatens to rekindle inflation and may force the Fed to cut interest rates less than expected. Indeed, stocks fell on Friday, closing out the worst week in more than two months. Here’s your markets wrap.
Oil snapped its three-day relief rally as traders reacted to what looks like an oversupplied market in the coming months. West Texas Intermediate fell 2.4% to settle cents above $67 a barrel, the lowest close since September. Brent settled barely above $71. Bad news for oil traders is often good news for everyone else, and not just because of lower prices at the pump. A big part of the decline may be related to renewed ceasefire talks in the Middle East and the prospect that Russia may end its war on Ukraine with a deal.
