US stocks post a good week since Donald Trump’s election win

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US stocks posted their best week since Donald Trump’s election victory, boosted by strong bank earnings and easing core inflation, which raised the prospect of reduce the interest rate this year.

The blue-chip S&P 500 closed 1 percent higher on Friday, leaving the index up 2.9 percent for the week.

That marked the best weekly gain since a 4.7 percent increase in the five meetings through Nov. 8, when Trump’s election victory raised hopes that tax cuts and repeal of legislation under the next administration will strengthen America’s business. The tech-heavy Nasdaq Composite added 2.5 percent, its best weekly gain since early December.

Last week’s rally came as banks including JPMorgan Chase, Goldman Sachs and Citigroup began the US earnings season with. reporting a strong increase in profits during the past year, driven by the increase in trade and commerce.

Investor sentiment also benefited from figures released this week by the Bureau of Labor Statistics that showed the annual headline. inflation it rose to an expected 2.9 percent in December from 2.7 percent in November. Core inflation, which strips out volatile food and energy costs, fell unexpectedly to 3.2 percent from 3.3 percent last month.

Inflation data this week meant sentiment was “back in the happy zone” again, said Mike Zigmont, co-head of trading and research at Wisdom Investment Group.

For now, “the inflation boogie man is no longer a concern (and) good earnings and guidance from the reporting banks strengthened the bulls even more”, he added.

Signs of lower inflation have boosted confidence among investors that the Federal Reserve, whose two-day meeting falls at the end of January, will continue to cut. fees in the coming months.

Blockbuster’s jobs numbers released last week left some market participants calling for an end to the central bank cycle or a rate hike to dampen the potential strength of the world’s largest economy.

Stocks have also come under pressure in recent weeks amid a sell-off in US-focused global bonds.

The slide stopped this week, however, with the two-year Treasury yield, which closely tracks interest rate expectations, reduced from a recent 4.42 percent on Monday to 4.27 percent.

The 10-year yield – a measure of global borrowing costs – fell from 4.8 percent to 4.61 percent over the same period. Products fall when prices rise.

“Reduced risks and improved returns create a good combination to renew the reduced risk appetite,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers.

“The second half of January may see a change in the trends that marked its beginning: low rates leading to high funds,” Ielpo added.

December’s low inflation numbers could reduce the risk of a near-term rate hike, according to Bank of America strategist Aditya Bhave. But steady economic growth, strong consumer spending and a solid labor market nonetheless mean that “we maintain our view that the Fed’s time for tapering is over”, he said in a letter to to customers.