Stocks struggle despite dovish rhetoric from a Fed official – US Market Wrap
Daily Dose, US

Stocks struggle despite dovish rhetoric from a Fed official – US Market Wrap

Stocks struggled to recover after a strong gain, while bond yields fell following dovish comments from Federal Reserve Governor Christopher Waller.

Wall Street also paid particular attention to Treasury Secretary candidate Scott Bessent’s statements, which claimed the US faced an economic disaster if the 2017 Republican tax cuts are not extended. Equities drifted lower after the S&P 500 rose about 2%. While most firms increased, a decline in tech megacaps drove the market down. Not even strong earnings from Morgan Stanley and Bank of America helped benchmarks.

Treasuries gained after Waller told CNBC that officials may cut interest rates again in the first half of 2025 if inflation statistics remained favourable. He also didn’t rule out a cut in March. Swap trade suggested a little more easing this year.

The dollar remained near two-year highs. Bessent emphasised the need of retaining the dollar as the world’s reserve currency. When asked about the potential inflationary impact of President-elect Donald Trump’s economic proposals, Bessent stated that he believes the initiatives will bring inflation closer to the Fed’s aim.