The stock market rally takes a breather. Now it’s at the mercy of the bond market as investors weigh Donald Trump’s economic plans and what they mean for interest rates.

The post-election surge in U.S. stock markets lost momentum this week, with the S&P 500 down 2% amid investor uncertainty over economic policies under President-elect Donald J. Trump. This marks a sharp reversal from last week’s 4.7% gain, driven by election clarity, expectations of business-friendly policies, and a Federal Reserve rate cut.

"U.S. unit labor costs are now running above the 2% inflation target on a year-over-year basis, which may become an issue for the Fed as it faces a potentially more inflationary climate under a new government," writes BMO Capital Markets Senior Economist Sal Guatieri.