Donald Trump’s win in the November US presidential election made people excited about the stock market, with many stocks going up quickly, the dollar rising, and even Bitcoin hitting new highs. But now, two months later, some of those gains are fading as Trump is about to start his time in office again.
In the stock market, the S&P 500 Index, which measures many big companies, has lost some of the gains it made after the election. Investors are worried about what the Federal Reserve (the bank that helps control the economy) will do with interest rates and how Trump’s plans might affect businesses. The yield curve, which shows how much interest rates differ for loans of different lengths, has also changed a lot since late November.
So, what does this mean for investors? The biggest worry is tariffs, which are taxes on goods coming from other countries. This might lead to trade wars, and people are also concerned about how Trump might handle immigration and its effects on the economy. Wall Street experts are trying to guess how these policies will affect the economy.
Stocks: After the election, small companies saw a big boost, with the Russell 2000 Index soaring by 5.8% the day after the election. Investors thought Trump’s trade policies would benefit these companies that mostly sell in the US. But as time passed, many of these stocks fell back down. Bank stocks initially jumped because Trump promised to lessen regulations on them, but they also lost momentum later on. Energy stocks, boosted by Trump’s support for oil drilling, have had ups and downs due to concerns over a surplus of oil and gas.
On the other hand, stocks in the cryptocurrency sector have maintained their gains, and Tesla, a company known for electric cars, has surged by 70% since Trump won, despite Trump being skeptical about electric vehicles.
Currencies: People also bet that the dollar would gain value after Trump won due to expected tariffs and spending. The dollar has increased in value, while currencies like the euro and Canadian dollar are weaker. Some experts think the euro could drop to equal one dollar, and many emerging-market currencies have also declined.
Interest Rates: Many expected that Trump’s win and the Republicans’ control would cause interest rates to go up, and that’s mostly happening. The gap between different loan rates has widened a lot in recent weeks. However, uncertainty around Trump’s policies has made investors less sure about how interest rates will change.
Cryptocurrency: Interestingly, Trump, who used to not like cryptocurrencies, is now planning to support them. He might make an executive order to prioritize crypto and lighten regulations. Since the election, Bitcoin and other cryptocurrencies have seen a big increase, with Bitcoin reaching new heights.
In short, while Trump’s election initially excited markets, many investors are now waiting to see what his administration will actually do, hoping for clear signals about policies that will affect the economy.
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