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  • U.S. Stocks See Record Inflows Following Trump’s Election Victory, Fueled by Investor Optimism

    U.S. Stocks See Record Inflows Following Trump’s Election Victory, Fueled by Investor Optimism

    U.S. stock markets saw a surge of inflows on Wednesday, the day of Donald Trump’s presidential election victory, as investors poured $20 billion into equity funds, according to Bank of America Corp. strategists. This significant boost marked the largest single-day inflow into U.S. stocks since June, as reported by strategist Michael Hartnett, who cited data from EPFR Global. Small-cap stocks, which are likely to benefit from Trump’s pro-American trade policies, experienced inflows of $3.8 billion—their highest since March.

    The election results have fueled a rally, pushing U.S. stock indices to new record highs, with the S&P 500 Index tracking toward its largest weekly gain in a year. Optimism surrounding potential corporate tax cuts under Trump’s administration has bolstered market sentiment, as investors anticipate the tax reforms will drive stronger earnings across many sectors. The Federal Reserve’s recent interest-rate cut has further supported the bullish trend in equities.

    However, Trump’s economic policies also bring potential concerns for the market. His stance on tariffs and stricter immigration could reignite inflationary pressures, which some analysts say could lead to higher costs for businesses and consumers. Following Trump’s victory, the 10-year Treasury bond yield initially surged, reflecting fears of inflation, though it has since eased back down.

    Bank of America strategist Hartnett emphasized the “inflationary boom” could prompt investors to shift away from bonds. He noted that a strong mandate for Trump might lead to “big policies,” including approximately $8 trillion in tax cuts, $3 trillion from tariff revenues, and $1 trillion in spending reductions. With Republicans gaining control of the Senate, and the House race still in flux with uncounted votes in around 30 districts, the policy landscape remains highly dynamic.

    Total inflows to U.S. equity funds for the week ending November 6 reached $32.8 billion. Meanwhile, European equity funds saw their sixth consecutive week of outflows, shedding $900 million amid growing concerns about the potential impact of Trump’s trade policies on European markets.

    As investors look to Trump’s economic agenda, the focus remains on how U.S. companies and broader markets will respond to upcoming policy shifts.

    Source : Swifteradio.com

  • Wall St Week Ahead: Expected US Rate Cuts Have Investors Looking Beyond Big Tech

     

    NEW YORK, July 12 (Reuters) – Looming U.S. interest rate cuts are presenting investors with a tough choice: stick with the Big Tech stocks that have driven returns for more than a year, or turn to less-loved areas of the market that could benefit from easing monetary policy.

    Owning massive tech and growth companies such as Nvidia (NVDA.O), Microsoft (MSFT.O), and Amazon (AMZN.O) has been a hugely profitable strategy for investors since early 2023, even as the stocks’ market dominance has drawn comparisons to the dot-com bubble of the late 1990s.

    That calculus may start to change following Thursday’s surprisingly cool inflation report, which solidified expectations for a near-term rate cut by the Federal Reserve. Lower rates are seen as beneficial to many corners of the market whose performance has lagged this year, including small-caps, real estate, and economically sensitive areas such as industrials.

    Market action at the end of the week showed a nascent shift may have already begun. The tech-heavy Nasdaq 100 (.NDX) suffered its biggest drop of the year on Thursday, while the small-cap Russell 2000 (.RUT) had its best day of 2024. The Nasdaq 100 has gained about 21% this year, while the Russell 2000 is up just 6%.

    Also on Thursday, the equal-weight S&P 500 (.SPXEW) – a proxy for the average stock in the benchmark index – had its biggest relative gain since 2020 over the S&P 500, which is more heavily influenced by the largest tech and growth stocks. That chipped away at the huge advantage for the S&P 500, which remains up about 18% in 2024 against a 6.7% gain for the equal-weight index.

    “The trade got too one-sided and we’re seeing some reversal of this,” said Walter Todd, chief investment officer at Greenwood Capital.

    Small caps and the equal-weight S&P 500 extended their gains on Friday even as tech stocks rebounded. Investors cautioned that the moves could be a snap-back after the disparity in performance between tech and other market sectors reached extremes. Further, recent periods of market broadening have been short-lived: for example, small caps surged at the end of 2023, when investors believed rate cuts were imminent, only to lag in the following months.

    Source: APNews