Futures tied to the S&P 500 and the Dow hit record highs in a sharp rally on Wednesday after Republican Donald Trump reclaimed the U.S. presidency, capping his return four years after he was voted out of the White House.
As votes added up, so-called Trump trades rallied, U.S. Treasury yields surged, bitcoin hit a record high and the dollar gained.
Dow futures jumped more than 1,200 points, while those tracking the benchmark index crept closer to the psychologically significant 6,000 level.
“Markets absolutely crave certainty,” said Dr. David Allen, portfolio manager, Plato Global Alpha Fund, adding that a Trump victory was likely “priced in at the margins”.
Futures tracking the small-cap Russell 2000 soared 6.2% to their highest levels since early 2022 as domestic-focused stocks expect to benefit from an easier regulatory and tax regime, as well as be less exposed to likely import tariffs.
Stocks that were expected to perform well if Trump wins a second term jumped. Trump Media & Technology Group (NASDAQ: DJT) soared 30.7%, and prison operators Geo Group (NYSE: GEO) and CoreCivic (NYSE: CXW) gained 30% and 22.4%, respectively.
Tesla (NASDAQ: TSLA) shares leapt 15% as top shareholder and CEO Elon Musk has supported Trump throughout his electoral campaign.
Strong gains were also seen in shares of banks, cryptocurrency companies, and energy firms, while renewable energy shares fell.
The Republican party also gained control of the U.S. Senate and posted early gains in the battle to maintain control in the House of Representatives.
A so-called “clean sweep”, in which one party captures the presidency, the House, and the Senate would give Trump an easier route to push through desired legislation.
“The big question for markets now is whether Trump’s win will bring full Republican control or a split government,” said Russell Shor, senior market specialist at trading platform Tradu.
“If Republicans take both chambers, Trump could have more room to cut corporate taxes—a potential boost for investor confidence.”
The VIX, a measure of market volatility, dropped sharply to its lowest since September. Investors have been bracing for several days of uncertainty over who the winner of the presidency would be.
Dow E-minis were up 1,211 points, or 2.86%, U.S. S&P 500 E-minis were up 132.5 points, or 2.28% and Nasdaq 100 E-minis were up 359.75 points, or 1.77%.
Wall Street analysts expect Trump’s plans for restricted immigration, tax cuts, and sweeping tariffs to put upward pressure on inflation and bond yields, while corporations could benefit from his tax and regulatory policies.
Later in the day, the Federal Reserve will kick off its two-day meeting where the central bank is expected to ease the benchmark interest rate by 25 basis points.
However, bets on a December rate cut reduced slightly to 68% from nearly 80% on Monday, as per CME FedWatch.
(Source: Reuters)
