S&P 500 Hits Record High Amid Trump’s Bold Inflation Commitments

NEW YORK, ​24 January 2025 – The Slamp; P 500 achieved a new ​record ​on Thursday, building an impressive start at 2025. The index increased by 0.5% ​to almost 6,118.71, exceeding its precocity in early December. This is a reflection of broader support for lower inflation data and important comments by President Donald Trump on economic policies.

The benefit of the ​S; P 500 clamp is part of a ​larger winning series, with the index climbing 4% in the first three weeks of January. The increase was supported by ​favourable inflation data showing higher than expected price increases in December. Investors responded positively in the hope that the Federal Reserve will maintain a more favourable position on interest rates, which benefits both consumers and businesses.

What does President Trump say to influence markets?

In a virtual speech at the World Economic ​Forum in Davos, Switzerland, President Trump made several shocking statements that attracted the attention of Wall Street. Trump reiterated his commitment to curb inflation, saying he would pressure Saudi Arabia and OPEC to reduce oil prices. Energy costs are an important factor in inflation, and ​this promise has been well received by markets.

In addition, Trump demanded immediate ​reductions in interest rates, which could reduce ​lending costs throughout the economy. ​The Treasury’s two-year return, a key benchmark for ​short-term rates, was further aggravated ​after your comments. Market participants viewed their statements ​as a sign that management remains focused on economic growth and price stability.

How ​did the markets react?

Thursday’s profits increased ​the rally through all major American indices. The average industrial Dow Jones increased by 0.92%, while Nasdaq Composite gained 0.22%. ​This marked the ​fourth consecutive ​session of profit for these indices, ​highlighting the growing optimism among investors.

According ​to ​the CNBC, Trump’s observations on oil prices and interest rates were a central catalyst for daily performance. However, analysts noted ​that while Trump’s ​statements can move markets in the short term, their ​long-term impact depends on concrete political actions. ​”Trump’s Davos’ speech contained seemingly ​positive lines, but there was little ​under his control,” said ​Adam Cisafulli, founder of Vital Knowledge.

Are there any risks to a market bubble?

Despite this positive dynamic, ​analysts expressed concern about the potential of a stock market bubble. ​UBS analysts estimate the probability of a bubble forming in the near future at 35%, particularly in ​high-grade sectors such as technology. According to UBS, bubbles usually occur when price-benefit relationships (P/E) in key sectors exceed 45x. Currently, the P/E ratio for the best technological actions is 34x, suggesting a margin of expansion, but also increasing vulnerability.

UBS points out that increasing bond yields could drive action, especially if ​the 10-year-old US Treasury’s performance is currently 4.65%, or ​5%. Historically, higher ​returns reduce ​the attractiveness of shares as an investment, leading to possible corrections in ​overvalued sectors.

How ​do inflation and interest rates affect investor sensitivity?

The Federal Reserve’s position on inflation and interest rates remains a critical approach for investors. ​As inflation shows signs of a slowdown, market participants expect Fed to delay rate increases, which ​could create an enabling environment for equity. ​However, higher than expected inflationary ​pressures could force the Fed to strengthen monetary policy, creating obstacles ​to action.

According to Seeking Alpha, the Fed should ​not reduce rates at its next ​meeting, but ​President Jerome Powell’s comments at the ​press ​conference could cause ​market volatility. “What ​Powell says will probably ​be more shocking than the decision itself,” said James ​Demmerst, Chief Investment Officer at Main Street Research.

What analysts recommend to ​investors?

Given the current market dynamics, UBS suggests a cautious approach. ​The bank advises ​to focus on defensive ​sectors with strong balance ​sheets and weak financial leverage. ​Companies like Microsoft, Abbott and BAE ​Systems are highlighted as resistant peaks in a potentially ​volatile environment. It is also recommended that European banks and life insurance stocks benefit from increased inflation expectations.

For those interested in populist policies and inflation risks, UBS recommends increasing exposure to financial equity, which could be used as cover. Meanwhile, high-priced ​non-financial cycles could face challenges if market ​conditions change.

Despite these concerns, the ​outlook for equity remains optimistic in the short term, especially if inflation remains moderate and economic growth stabilizes. As ​UBS analysts say, the strong financial position ​of large companies, ​particularly in ​the field of technology, offers a buffer against potential risks.

In general, markets balance short-term optimism with long-term prudence. Investors are advised to remain vigilant and ​diversify their portfolios in ​order to navigate future potential volatility.