Wall Street is intoxicated by the 'Trump Trade'
The attempt on US presidential candidate Trump drives Wall Street indices to new heights. Many investors are betting on Trump's increased chances of winning the election in November and are taking on risks. The stock of Trump's media company is making a huge gain.
At the US exchanges, Dow-Jones and S&P-500 marked new all-time highs at the start of the week. The assassination attempt on former President and presidential candidate Donald Trump over the weekend, which left him slightly injured, has increased Trump's chances of winning the election, according to observers. Trump is considered "market-friendly" compared to the incumbent President Joe Biden. If Trump wins, he could raise taxes but also cut taxes and further increase the US budget deficit. The Dow-Jones Index gained 0.5 percent to 40,212 points, S&P-500 and Nasdaq-Composite added 0.3 and 0.4 percent, respectively. There were 1,621 (Friday: 2,127) winners versus 1,200 (705) losers. 58 (60) titles remained unchanged.
The market was also supported by weak economic activity in New York, which underpinned the yield curve speculation. Federal Reserve Governor Jerome Powell did not encourage or discourage expectations of a first interest rate cut in September during a question-and-answer session in Washington. "I still think the Fed will act in September because the policy after the election is very uncertain, even if one seems certain of the winner," market strategist Jake Schurmeier of Harbor Capital said about the US election in November.
Bonds not in demand
Bond yields recovered from recent losses. This was not a reversal of the yield curve speculation, it was said. The dollar gained with rising market interest rates; the dollar index trended 0.1 percent higher. "Safe havens" like the dollar or also bonds were not sought with the increased prospects of a Trump victory, it was said from the market. A protectionist economic policy by Trump was, however, fundamentally dollar-friendly, according to market participants. At the currency market, cryptocurrencies, including Bitcoin, gained significantly. Trump is considered more open to cryptocurrencies than Biden.
Oil prices gave back slightly. Observers reported demand concerns after disappointing Chinese economic data. Reports indicated that the Islamist Hamas was continuing weapons truce negotiations despite recent Israeli strikes in the Gaza Strip. This development did not encourage buying at the oil market, it was said. The gold price rose moderately and approached the all-time high - supported by yield curve speculation in the context of weak data from New York.
Goldman strong after solid numbers
The bet on a Trump victory primarily benefited the stock of the Trump-founded Social Media Company Trump Media & Technology Group, whose share price made a gain of 31.3 percent. Meanwhile, the earnings season was entering a new round. On Monday, asset manager Blackrock and bank Goldman Sachs presented their second-quarter business figures. The share price of Blackrock trended 0.5 percent lower. Blackrock impressed with the results but fell short of expectations in terms of earnings. Goldman gained 2.6 percent. The bank had more than doubled its profit in the quarter and thus exceeded market expectations.
Stocks of cryptocurrency exchanges followed the cryptocurrencies' prices upward. Coinbase Global improved by 11.5%, Marathon Digital by 18.3%, and Microstrategy by 15.4%. According to a report by the "Wall Street Journal", Google parent company Alphabet is in advanced talks to buy cybersecurity startup Wiz for $23 billion.
Apple (+1.7%) sold 1.5% more iPhones in the second quarter than in the comparable period last year, according to preliminary data from analysis firm International Data. The stock price reached another record high, boosted by positive analyst comments.
Broadcom (+0.8%) implemented the stock split effectively. In exchange for one old share, investors received ten new ones in their portfolios. Macy's dropped 11.8%. The department store chain called off its acquisition talks with Arkhouse Management and Brigade Capital Management.
Tesla rose 1.9%. CEO Elon Musk pledged support for Trump during his bid for the White House. Trump is not known to be a supporter of electric vehicles. SolarEdge fell 15.4%. The company plans to lay off 400 employees due to a weak solar market. The titles of First Solar gave back 8.5%, and Enphase Energy 5.3%.
In the aftermath of the assassination attempt, many investors on Wall Street believe Donald Trump's chances of winning the 2024 United States Presidency Election have significantly increased, leading to increases in stock prices. The Dow-Jones Index, S&P-500, and Nasdaq-Composite all reached new all-time highs at the start of the week. If Trump were to win the election, his "market-friendly" policies could potentially lead to tax cuts and further increase the US budget deficit, which some investors find appealing.
The stock of Trump's media company, Trump Media & Technology Group, has seen a massive gain as a result of the increased chances of Trump's victory. This is primarily due to the belief that a Trump presidency would be beneficial for the company's operations.
The market strategist Jake Schurmeier of Harbor Capital expressed that the policy after the 2024 US election is uncertain, even if one seem certain of the winner. This uncertainty could potentially impact stock prices and investor decisions leading up to and following the election.
