The post-election stock market rally is losing steam as expectations for Federal Reserve interest rate cuts diminish. On Monday, the Nasdaq fell by as much as 1%, while the S&P 500 and Dow Jones also saw declines. For the first time since Election Day, S&P 500 futures dropped below their Nov. 6 levels.

President-elect Donald Trump had anticipated that his reelection would fuel business optimism, but concerns about inflation and the U.S. fiscal outlook have dampened investor enthusiasm. A strong December jobs report showing 256,000 new payrolls led traders to revise their 2025 interest rate outlook, now expecting fewer cuts or even potential hikes if inflation remains high. Higher interest rates reduce borrowing capacity for traders, making stocks less attractive.

Investors are also reacting to rising U.S. borrowing costs and concerns over Trump’s fiscal policies. His plans for tax cuts and spending reductions face political hurdles, and his call to raise the debt limit could further complicate economic stability. Markets are also wary of Trump’s proposed tariffs, which analysts predict could drive inflation higher.

This week, Wall Street will analyze producer and consumer price index data. Any unexpected inflation spikes could add further pressure to financial markets.