Market Surges to Record Highs as Trump Wins Presidential Election
The US stock market surged to record highs on Wednesday following Republican Donald Trump’s victory in the 2024 presidential election, which marks his return to the White House.
Market Reaction
The Dow Jones Industrial Average rose 1,508.05 points, or 3.57 percent, to 43,729.93. The S&P 500 added 146.28 points, or 2.53 percent, to 5,929.04. The Nasdaq Composite Index increased 544.29 points, or 2.95 percent, to 18,983.47.
Sector Performance
Eight of the 11 primary S&P 500 sectors ended in green, with financials and industrials leading the gainers by adding 6.16 percent and 3.93 percent, respectively. Meanwhile, real estate and consumer staples led the laggards by losing 2.64 percent and 1.57 percent, respectively.
Trump Trades Rally
Trump’s win spurred a strong rally in so-called "Trump trades" by lifting U.S. Treasury yields sharply, driving Bitcoin to a new high above US$75,000, and pushing the dollar toward its biggest single-day gain since September 2022.
Stocks that Fared Well
Stocks seen as favourable under Trump’s administration also gained, with Trump Media & Technology Group rising 5.94 percent and Tesla jumping almost 15 percent as Tesla CEO Elon Musk showed support for Trump. Cryptocurrency companies, energy firms, and prison operators saw strong gains, while shares in renewable energy companies declined.
Analyst Views
"The fact that we got a clean result, there’s not going to be any messy contesting or court cases or whatever it might have been, is a relief to markets," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
Earnings Guidance
Goldman Sachs strategists maintained their 12-month S&P 500 index target of 6,300 points given Donald Trump’s White House election victory on Wednesday. "Robust earnings growth should drive continued equity market appreciation into next year," wrote Goldman’s chief US equity strategist David Kostin and his team.
Fed’s Monetary Policy
In the meantime, the Federal Reserve is anticipated to reduce the benchmark interest rate by 25 basis points in its meeting ending on Thursday, though traders have moderated expectations for additional cuts in December and next year, according to CME’s FedWatch Tool.
Corporate News
On the corporate front, Nvidia hit a record high on Wednesday, climbing 4.07 percent as major indexes rallied in response to Trump’s presidential win. Tesla surged 14.75 percent on Wednesday as Wall Street analysts evaluated the potential benefits for the electric vehicle giant under Trump’s presidential administration.
Conclusion
The market reaction to Trump’s victory reflects the optimism surrounding his administration’s potential impact on the economy. As the Federal Reserve and other economic agencies continue to monitor the situation, investors are advised to stay informed about any developments that may affect the market.
Frequently Asked Questions
- What triggered the market surge?
- Donald Trump’s victory in the 2024 presidential election, which marks his return to the White House.
- Which sectors performed well?
- Financials, industrials, and sectors seen as favourable under Trump’s administration.
- What is the outlook for the market?
- Robust earnings growth is expected to drive continued equity market appreciation into next year, according to Goldman Sachs strategists.
- What is the Federal Reserve’s stance on monetary policy?
- The Federal Reserve is anticipated to reduce the benchmark interest rate by 25 basis points in its meeting ending on Thursday, though traders have moderated expectations for additional cuts in December and next year.