Before the post-election rally to the polling level

Traders work on the floor of the New York Stock Exchange (NYSE) on November 12, 2024 in New York City.

Spencer Platt | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe. Here.

What you need to know today.

Markets ended the week in the red.
American markets Friday fell and ended a low week. gave S&P 500 It fell 1.32 percent. Dow Jones Industrial Average 0.7 percent and Nasdaq Composite fell 2.24 percent. of Europe Stokes 600 Down 0.77%, its fourth straight losing week. Separately, Britain’s economy grew 0.1 percent in the third quarter, missing the 0.2 percent mark expected by economists.

Caught in the crossfire.
China may be the target of US President-elect Donald Trump’s bold trade policies, but American companies may be caught in the crossfire. If Trump imposes tariffs on China, the Chinese government could retaliate by introducing its own tariffs, diversifying its imports from the U.S. and increasing scrutiny of U.S. firms operating in China.

Biden’s last official meeting with Xi
US President Joe Biden met his Chinese counterpart Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation Summit on Saturday. Biden reflected on his decades-long relationship with Xi, while Xi appeared more focused on Trump’s presidency, saying: “China needs to maintain communication, expand cooperation and manage differences. Ready to work with the new US administration.”

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Companies in the pureplay space have seen their shares rise over the past week. For example, shares of Rocket LabThe aerospace maker gained 41 percent on a weekly basis. While it was fueled by positive news from the company’s earnings report, analysts say the “Trump-Eleven” trade is also behind space stocks’ gravity-defying moves.

[PRO] Nvidia sets the tone this week.
Markets have had a wild few weeks, with investors digesting the results of the US presidential election, Federal Reserve rate cuts, inflation readings and odd comments from Fed Chair Jerome Powell. This week, all eyes will be trained on one key event: Nvidia’s earnings, due out on Wednesday.

The bottom line

Trump’s decisive victory in the presidential election coupled with his allegedly market-friendly policies sent the markets to new highs.

Last Monday, the S&P closed above 6,000 and the Dow finished the day above 44,000 for the first time. so-called ““Trump trades” — banks, smaller companies and energy shares, for example — were behind most of the indexes’ gains.

As anyone who has overeaten at a feast knows, however, there comes a point when satisfaction turns to satiety.

It was only the beginning of the week, but little did we know we were on the cusp.

When markets closed Friday, the S&P was down 2.1% and the Dow was down 1.2% for the week — both ending the week below their milestones. The Nasdaq was down 3.2 percent on a weekly basis.

A slump in pharmaceutical stocks dragged down the S&P and the Dow. It began when Trump announced that he plans to nominate Robert F. Kennedy Jr., who has expressed unorthodox beliefs on health, to lead the U.S. Department of Health and Human Services.

It illustrates how investors must delicately navigate Trump’s policies, which often present themselves as a double-edged sword.

For example, Trump’s proposed tariffs and tax cuts would boost small caps and boost corporate profits but could also keep inflation hot and interest rates high — which weighed on markets last week. There were concerns.

“In the near term we should expect some micro-volatility, particularly around potential policy changes under the new administration,” said Christy Akolian, head of iShares investment strategy, Americas. Black Rock.