US stocks experienced a sharp rise on Wednesday after Donald Trump was projected to win the 2024 presidential election. The Dow Jones Industrial Average soared by 1,309 points, or 3%, reaching a new high. This marks the first time the Dow has gained over 1,000 points in a single day since November 2022. If the Dow maintains its gains, it could be one of the top five point gains in history.
Markets React to Quick Election Outcome
The rapid resolution of the election boosted market confidence. The uncertainty surrounding the election, fueled by concerns that Trump’s allies might contest the result in court, had been a major concern for markets. The swift conclusion provided much-needed clarity. Michael Block, COO at AgentSmyth, stated that markets were relieved to avoid another January 6th-like event. “There’s clarity. The market is breathing a huge sigh of relief,” he said.
Bitcoin Hits Record High After Trump Wins Election
Trump’s Victory Fuels Business Optimism
Trump’s victory also sparked optimism about a “red wave” that could bring pro-business policies, especially with Republicans taking control of the Senate. Many investors believe these policies could benefit the stock market. “There is this huge perception of a business-friendly, tax-friendly regime,” said Block.
JPMorgan’s Predictions for Stocks
Ahead of the election, JPMorgan analysts predicted that a “red wave” would lead to stock gains through 2024. However, they also noted that uncertainty around policy execution might increase in 2025. Historically, markets have performed well under both Democratic and Republican presidents. The S&P 500 has averaged a 10% growth under Democrats and 6.7% under Republicans.
Initial Market Reaction May Be Temporary
Art Hogan, Chief Market Strategist at B Riley Wealth Management, noted that the market’s initial enthusiasm for a Trump presidency could be temporary. “The market is saying: We just elected a business-friendly president,” he explained.
Trump’s Economic Policies and Their Impact
Trump’s economic policies, such as tax breaks and increased public spending, could increase the national deficit and affect US Treasury bonds. The 10-year bond yield rose to 4.47%, the highest since July. This increase in yields could limit the Federal Reserve’s ability to lower interest rates, especially in light of recent inflation concerns.
Higher Rates and Impact on Consumer Loans
The higher bond yields, linked to Trump’s policies, could lead to higher consumer loan rates, including mortgage and auto loans. While the Fed has been cutting rates since September, the rise in yields may counteract these efforts, potentially affecting loan rates.
Trump-Related Stocks See Gains
Trump-related stocks, including those from his social media venture, Trump Media & Technology Group, surged by nearly 24% on Wednesday. Bank stocks, such as Citi, Bank of America, and JPMorgan Chase, also saw significant gains, rising 8.5%, 7.7%, and 7%, respectively. Stocks in the detention and deportation sector, such as GEO Group and CoreCivic, surged by 34% and 25%, respectively.
Other Market Movements
The US dollar rose by 1.7% against the euro and British pound, reaching its highest level since July. Bitcoin also saw a sharp increase, breaking $74,000. Tesla’s stock jumped by 13.2%, with some speculating that CEO Elon Musk’s support for Trump could lead to closer ties with the White House.
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