Huge boost for 401(k)s as Wall Street smashes two records in hours

Two of America's main three stock indexes hit record highs today - burst though key levels as the Trump rally gathers pace.

The S&P 500 index hit the the 6,000 milestone just before 1pm in New York - two hours after the Dow Jones hit a key level, 44,000. Only nine months ago the S&P hit 5,000 .

A sweeping Trump victory powered bets of a business-friendly agenda and an expected interest-rate cut eased pressure on the US economy .

Both the indexes are set for their best week since last November, while the Nasdaq - which hit a record high on Thursday - is on track for its best in two months and second-best week in 2024.

Expectations of lower corporate taxes and looser regulations under Republican Donald Trump helped the benchmark index and Dow notch intraday record highs for the third straight session.

The upbeat sentiment got a boost from the Federal Reserve cutting the benchmark rate by 25 basis points on Thursday, with Chair Jerome Powell saying that the election outcome would not have a 'near-term' impact on the monetary policy.

The small-cap Russell 2000 rose 0.2 percent on the day, also set for its best week in four years.

Traders, however, have already cut expectations for rate cuts next year and bond yields have jumped to multi-month highs on worries of complications to the Fed's monetary easing path from Trump's expansionary policies lifting inflation.

Bond yields tend to rise when Wall Street thinks inflation will rise, which in turn means interest rate cuts are less likely.

But Wall Street is expecting stability - based on a well known fear guage called the VIX, which rises when volatility is expected.

'The VIX has also gone down a ton - that means that there's a lot of optimism out there,' said Ryan Dykmans, chief investment officer at Dunham & Associates Investment Counsel.

The markets may be underpricing the risk of higher inflation and interest rates, he said. 'I'm still of the camp that the next seven or eight months worth of (Fed) cuts are very uncertain.'

Powell said the central bank would begin estimating the impact on its twin goals of stable inflation and maximum employment when the new administration's proposals take shape.

At 11:46am in New York, the Dow Jones Industrial Average rose 248.48 points, or 0.57 percent, to 43,977.82, the S&P 500 gained 20.53 points, or 0.34 percent, to 5,993.63 and the Nasdaq Composite lost 11.08 points, or 0.06 percent, to 19,258.38.

Rate-sensitive technology stocks eased 0.2 percent, while materials was the biggest decliner. However, the utilities and real estate sectors gained more than 1 percent each.

Shares of chipmaker Nvidia dipped 1.1 percent after the AI pioneer became the first in history to surpass a $3.6 trillion in market value on Thursday.

Airbnb dropped 8.2 percent after missing third-quarter profit estimates, while Pinterest slumped 16 percent after a disappointing revenue forecast.

US-listings of Chinese companies lost ground as the government's latest fiscal support measures failed to impress investors. JD.com and Alibaba fell around 6% each.

Investors are also keeping an eye on a likely 'Red Sweep' as Republicans were set to keep their narrow lead in the House of Representatives after winning control of the Senate. That would make it easier for Trump to enact his legislative plans.

Advancing issues outnumbered decliners by a 1.48-to-1 ratio on the NYSE and by a 1.06-to-1 ratio on the Nasdaq.

Companies in the S&P 500 posted 76 new 52-week highs and seven new lows while the Nasdaq Composite recorded 162 new highs and 81 new lows.