It’s quite stunning. On the New York Stock Exchange, the technology-rich Nasdaq index broke the 20,000-point barrier for the first time in its history on Wednesday, December 11; the S&P 500, which represents major US companies, is above 6,000 points; the Dow Jones is at 44,000 points. In total, since the start of the year, their respective surges have been by a third, 27.5% and 17.4%. Better still, over the last 10 years, they have been multiplied by four, three, and 2.5 respectively.
America is back, driven by tech. This has been true since the end of Barack Obama’s term, when he had to deal with the aftermath of the terrible financial and real estate crisis of 2008, which led to a terrible recession. And Donald Trump intends to build on this performance.
According to the Associated Press (AP), the president-elect was expected to ring the bell at the opening of Wall Street on the New York Stock Exchange (NYSE) on Thursday morning, December 12. Despite his decades as a New York businessman, he has never done it before.
These days, Wall Street is being driven by three phenomena. The first is the cut in interest rates. The US Federal Reserve has cut rates by half a point and then a quarter point since September. The monetary institution is expected to ease the pressure further at the final meeting of its Monetary Policy Committee on Wednesday, December 18. Rates will then have fallen back to 4.25%.
The inflation figure for November should not derail this process, even if the cost of living remains too high. Prices rose by 0.3% between October and November (compared with + 0.2% in previous months). Over a year, inflation is at + 2.7% and remains too high, at + 3.3%, if energy and food are excluded, due to the rise in housing (+ 4.7% over a year). But the Fed is so committed to cutting rates, that no one is betting that it will take the financial markets in its stride.
Markets see only Trump promises
Harvard economics professor and former Obama adviser Jason Furman expressed caution: “I was grudgingly fine with one last interest rate cut before a pause. But if it were up to me I wouldn’t cut in December,” he wrote. He lamented that “The last mile [to fall back around the Fed’s 2% inflation target] is proving very, very stubborn.”
Economists may be predicting the return of rising prices with the deportations of migrants and higher tariffs promised by Trump, but the markets don’t care. They only see promises of lower corporate taxes, less red tape, or permits to invest in the US. “Any person or company investing one billion dollars, or more, in the United States of America, will receive fully expedited approvals and permits, including, but in no way limited to, all Environmental approvals. GET READY TO ROCK!!!” the president-elect wrote on his Truth Social network.
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