Overview
Following Donald Trump’s victory in the 2024 U.S. presidential election, U.S. stocks surged, with the S&P 500 hitting a record high as investors rallied around expectations of economic growth fueled by proposed tax cuts, increased government spending, and reduced regulations. The S&P 500 rose 2.51%, led by financials and small-cap stocks, which stand to benefit from Trump’s expected deregulatory stance. The Russell 2000 index, representing small-cap companies, surged nearly 6%, while the S&P 500 Banks Index spiked 10.68% on optimism around a lighter regulatory approach.
The U.S. dollar reached its highest level in over four months as investor enthusiasm for Trump’s fiscal policies bolstered confidence in the currency. Meanwhile, bond prices plummeted, with the 10-year Treasury yield climbing to 4.48% as investors anticipated potential inflationary effects from increased tariffs and higher government debt. In the cryptocurrency sector, Bitcoin hit a record high of approximately $75,000, reflecting market bets on Trump’s softer stance toward crypto regulation. As Republicans gained control of the Senate, the political landscape appears set for swift movement on Trump’s agenda, driving optimism for economic stimulus measures.
- Dow Jones Industrial Average: Increased 1.76% to 43,001.05
- S&P 500: Gained 2.51% to a record 5,926.34
- Nasdaq Composite: Rose 1.92% to 18,787.26
Fear & Greed Index
Greed – Optimism surged as investors anticipated economic growth and regulatory rollbacks under Trump’s administration, boosting confidence.
Sector Performance
- Winners:
- Financials and Small Caps: Sectors led gains, with banks and small-cap stocks rallying on expectations of deregulation and economic stimulus.
- Cryptocurrency Stocks: Companies like Coinbase surged alongside Bitcoin’s record-breaking gains, driven by Trump’s anticipated crypto-friendly policies.
- Losers:
- Emerging Markets: Emerging market currencies such as the Mexican peso fell sharply as concerns rose over potential tariffs and trade restrictions under Trump’s policies.
- Treasuries: The 10-year Treasury yield spiked as investors sold off bonds, expecting inflation from increased fiscal spending and tariffs.
Key Movers
- Tesla (TSLA): Jumped 14.75% as Trump supporter Elon Musk’s company benefitted from anticipated deregulation in manufacturing and energy.
- Coinbase (COIN): Soared as Bitcoin prices reached all-time highs, with expectations of a crypto-friendly administration.
- Robinhood Markets (HOOD): Reported its largest-ever overnight trading session, with investors flocking to stocks anticipated to benefit under Trump’s presidency.
Economic Data
- Treasury Yields: The 10-year Treasury yield rose to 4.48%, reflecting inflation concerns and investor expectations of increased government debt.
- Emerging Market Currencies: The Mexican peso and other emerging currencies faced declines due to fears over Trump’s potential tariff policies.
Outlook
With Trump’s election victory and the Republican-led Senate, markets anticipate swift policy changes, particularly around tax cuts, tariffs, and regulatory rollbacks. This expected fiscal stimulus could fuel inflation, leading the Federal Reserve to adopt a more cautious stance on rate cuts, with some economists now predicting only one rate cut in 2025. Investors are also preparing for the Fed’s monetary policy decision on Thursday, with Trump’s win potentially prompting a slower rate-cutting pace to manage inflation risks from tariffs and increased spending.
As markets digest the election outcome, sectors like financials and small caps are expected to continue benefiting, while emerging markets and bonds may face pressures from trade and inflation concerns. Cryptocurrency and tech stocks remain strong, bolstered by anticipation of a lighter regulatory environment. With political clarity and economic stimulus on the horizon, investor sentiment is positioned for growth, albeit with caution toward inflationary pressures.