Following President-elect Donald Trump’s victory over Vice President Kamala Harris, Wall Street saw a sharp rise as investors anticipated favorable economic policies from a Trump administration.
The Dow Jones Industrial Average jumped around 1,200 points to surpass 43,000, the Nasdaq Composite added over 300 points, and the S&P 500 gained 2 percent, reflecting broad optimism in the market.
Trump Media and Technology Group (TMTG), the parent company of the social media platform Truth Social, surged midweek, with shares climbing by 28 percent to over $43.
This leap reflects increased confidence in Trump’s leadership, as TMTG’s stock serves as a barometer for his political momentum. Trump’s stake in the company now represents a $5 billion valuation, up from $3.9 billion before the election.
Tesla also saw substantial gains, rising by 12 percent on speculation that the Trump administration will favorably impact the electric vehicle sector and give Elon Musk, Tesla’s CEO, a powerful role.
Trump has announced plans for Musk to lead a new commission called the Department of Government Efficiency (DOGE), focused on minimizing waste and fraud in government spending.
Analysts, including Wedbush’s Dan Ives, foresee Tesla’s market valuation potentially hitting $1.5 trillion with supportive policies.
Cryptocurrencies experienced significant growth as Trump’s proposed deregulation spurred investment.
Bitcoin reached an all-time high of $75,000, while Coinbase shares rose nearly 13 percent in anticipation of regulatory relief. Trump’s promise to establish a Bitcoin reserve and replace SEC chief Gary Gensler with someone more crypto-friendly also boosted investor confidence.
Financial institutions, including major banks like Bank of America and JPMorgan Chase, posted gains of around 6 percent as investors anticipated relaxed regulations.
On the other hand, clean energy stocks stumbled, with companies like Enphase Energy and First Solar suffering double-digit losses, as investors feared Trump’s potential rollback of the Inflation Reduction Act’s green subsidies.
The U.S. Dollar Index surged by 2 percent, driven by investors’ optimism about economic growth and a possible rate cut by the Federal Reserve.
Treasury yields also rose, with the 10-year yield nearing 4.5 percent. Analysts are predicting fewer rate cuts due to inflation concerns, with many seeing this as a cautious stance to prevent inflation from rising again.
Commodity prices responded to the strengthened dollar, with oil and gold futures declining. WTI crude oil dipped by over 1 percent to approximately $71 per barrel, while gold futures dropped below $2,680 per ounce.
Energy analysts like Phil Flynn suggest Trump’s anticipated pro-energy policies could further impact fossil fuel prices.
Trump’s victory has injected fresh optimism into Wall Street, yet there are questions about the potential inflationary effects of his policies, including proposed tariffs on imports.
As the financial sector braces for what could be a shift in policy direction, experts like Mohamed El-Erian highlight the need for careful fiscal management over the next four years to maintain stability in the markets.