Nvidia Joins Dow as S&P 500 Eyes Best Week of the Year Post-Trump Rally

S&P 500 Steady, on Track for Best Weekly Gain in a Year Following Trump Election Victory

U.S. stocks opened with little change on Friday, extending a robust post-election rally that has driven major indexes to their best weekly gains in a year. Investors have reacted positively to President-elect Donald Trump’s win, particularly anticipating business-friendly policies from a Republican administration.

The S&P 500 and the Dow Jones Industrial Average have climbed 4.4% and 4.2%, respectively, while the Nasdaq outperformed with a 5.7% advance as of Thursday’s close. Small-cap stocks, tracked by the Russell 2000, have surged over 7%, benefiting from optimism around Trump’s domestic-focused growth policies.

Market Boost from Policy Expectations

Barclays strategist Venu Krishna noted that investors are “eager to price in” potential growth policies, particularly those that favor small-cap and domestic companies. Krishna cautioned, however, that the rally may be pushing indexes into technically overbought territory. Historically, investors see Republican control as conducive to deregulation, mergers, and potential tax cuts, though concerns remain around deficit spending and inflationary pressure from increased tariffs.

Federal Reserve’s Rate Cut and Economic Outlook

On Thursday, the Federal Reserve responded to post-election market conditions by cutting interest rates by a quarter point, aligning with market expectations. Fed Chair Jerome Powell commented on positive economic momentum, yet market experts like Scott Helfstein of Global X ETFs highlighted uncertainties in the Fed’s future rate path. The potential combination of Trump’s growth policies and new tariffs may fuel inflation, challenging the Fed’s balancing act between stable prices and employment goals.

Cathie Wood’s ARK Innovation ETF Outpaces Market

Among sector highlights, Cathie Wood’s ARK Innovation ETF (ARKK) soared 11.6% this week, its strongest performance since last year. Key holdings—Coinbase, Palantir, and Robinhood—gained as investors anticipated regulatory leniency under Trump. Tesla, ARKK’s top holding and led by Trump supporter Elon Musk, also rallied, adding to the fund’s weekly gains. Despite this strong week, the ETF has seen modest overall gains this year relative to broader tech benchmarks.

Noteworthy Movers in the Market

In corporate news, Nvidia officially joined the Dow Jones Industrial Average on Friday, replacing Intel alongside Sherwin Williams. Nvidia’s stock has gained nearly 220% over the past year, underlining investor enthusiasm for chipmakers amid rising AI demand.

Elsewhere, Trump Media & Technology Group’s stock, DJT, fell 4.6% in premarket trading, continuing a decline after an initial election bump. Other earnings-related movements included Toast, which surged 14.2% on strong third-quarter results, while Pinterest and Airbnb saw steep losses due to weaker-than-expected guidance and earnings.

Additional earnings surprises came from Upstart, which beat revenue forecasts, and Lucid Group, which posted a smaller-than-expected loss and higher revenue. In contrast, Sweetgreen and Capri Holdings struggled, with both companies missing estimates and reporting weaker revenue.

Outlook: Sustaining Momentum Amid Policy Uncertainty

While the market has rallied strongly on optimism surrounding Trump’s anticipated policies, sustaining these gains may be challenging. With major indexes near overbought levels, profit-taking could surface if concrete policy changes are delayed. Additionally, inflation concerns may rise with Trump’s spending plans, potentially increasing Fed rate hike expectations. Short-term, traders may see opportunities in sectors like energy, financials, and industrials, which stand to benefit from Trump’s policy leanings. However, vigilance is warranted as inflationary pressures and policy uncertainty could introduce volatility into the markets.