The stock market’s “Trump bump” that followed his victory over Vice President Kamala Harris in last week’s election appears to be coming to an end.
On Friday, the market dropped to its lowest point since the election, with the Dow Jones Industrial Average down more than 300 points, or about 0.7 percentage points. It has dropped more than 800 points, or about 1.9 percent, since peaking on Monday.
The Dow Jones average jumped 1,500 points, or about 3.57 percentage points, the Wednesday after Trump’s victory as traders reacted positively to Trump’s plans to lower taxes and emphasize deregulation when he returns to the White House in January.
Newsweek reached out by email to Trump’s transition team for comment.
Friday’s drop comes after two key economic developments that may be influencing traders’ decision-making.
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On Thursday, Jerome Powell, the chair of the Federal Reserve, said the central bank is in no hurry to implement further interest rate cuts.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
Two days after the election, the Fed implemented a quarter-point cut, lowering rates to between 4.5 and 4.75 percent. In September, the Fed lowered its key rate, which was at a 23-year high, by half a point to between 4.75 and 5 percent. The cuts are viewed as a promising sign for the economy as inflation rates have dropped since peaking in 2022.
The Fed has sought to achieve an economic “soft landing” as the economy recovers from the COVID-19 pandemic, which in 2020 caused a severe economic downturn worldwide. These rate cuts are viewed by economists as a sign that the Fed is optimistic about the country’s economic future.
Fed officials signaled in September that they anticipated the central bank could cut rates four times in 2025. Wall Street now expects just two Fed rate cuts, according to CME FedWatch.
The market also appeared to react to Trump naming Robert F. Kennedy Jr. to lead the Department of Health and Human Services late Thursday evening. Kennedy’s previous comments on vaccines have drawn the ire of scientists and public health experts who say he has pushed misinformation about vaccination.
Kennedy has said he is not against all vaccines and would not ban them. But he told podcaster Lex Fridman that there are “no” safe and effective vaccines, which breaks with the overwhelming scientific consensus on vaccination.
On Friday morning, when the stock market opened, companies that produce vaccines saw their shares drop. Pfizer‘s stock was down 4.3 percent, while Moderna’s fell 3.1 percent. Novavax stock saw a 2.8 percent dip.
The economy was a central campaign issue for voters this year, and their critical views of it helped carry Trump across the finish line.
Exit polls showed that a majority of Americans were unhappy with the direction of the country. Harris faced criticism over the Biden administration’s handling of the economy and inflation, although Democrats said President Joe Biden‘s signature legislative victory, the Inflation Reduction Act, contributed to lowering inflation rates.
