S&P 500 hits all-time highs
US stock index futures were a touch lower this morning, pulling back following gains for all four majors on Thursday. Yesterday the S&P 500 finally broke above 6,100 to hit a fresh all-time high, while also posting a record close. The Dow and NASDAQ 100 were both around 1% below their respective all-time highs, while the mid-cap, domestically-focused Russell 2000 is now 6% adrift. Bear in mind how the Russell outperformed the other indices in the aftermath of Trump’s decisive electoral victory in November. Could this suggest that there are problems in the broader US stock market, away from the giant multinationals? The yield on the 10-year Treasury note is unchanged from yesterday at around 4.63%. The pullback in yields since last week’s benign inflation data is giving equities some support. The US dollar has fallen from the 26-month highs hit just under a fortnight ago. The Dollar Index has lost around 2.5% since then which is a significant move. Prior to Trump’s inauguration, the dollar had rallied, partly on the expectation that he would impose immediate swingeing tariffs from ‘Day 1’ as he threatened while on the campaign trail. The dollar retreated as tariffs weren’t forthcoming, and it fell further overnight following Trump’s call for an immediate cut in interest rates. His call comes just ahead of next week’s Federal Reserve monetary policy meeting. Although the probability of another cut from the Fed is realistically zero. The fourth quarter earnings season has had a positive start, and this is helping to support equities. Today brings results from a range of corporates across different sectors including American Express, Verizon Communications, NextEra Energy, HCA Healthcare and some regional banks. There are also updates on US Manufacturing and Services PMIs.
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