U.S. Stocks Hit Record Highs Following Trump’s Election Win

U.S. stocks surged to record levels on Wednesday as markets reacted positively to Republican Donald Trump’s comeback victory in the 2024 presidential election. Investors embraced the likelihood of lower taxes, reduced regulations, and a market-friendly administration. The Dow Jones Industrial Average jumped 1,450 points (3.43%) to close at 43,671.12, while the S&P 500 climbed 2.39% to 5,920.87, and the Nasdaq Composite gained 2.78% to reach 18,953.43.

Trump’s victory, delivered without legal disputes or extended vote-counting, was welcomed by investors. “The fact that we got a clean result… is a relief to markets,” said Ross Mayfield, an investment analyst at Baird. Financial stocks led the rally, with the S&P 500’s financial sector rising nearly 6% as banks looked forward to a less restrictive regulatory environment. The S&P 500 bank index surged about 10%, marking its largest daily gain in two years.

Other sectors benefiting from “Trump trades” included energy, cryptocurrency, and small-cap stocks. The Russell 2000 index, which focuses on smaller domestic companies, jumped over 5% to a three-year high, buoyed by expectations of tax cuts and deregulation. Meanwhile, Treasury yields rose as investors factored in the potential for increased government spending under Trump, which could pressure smaller companies with high borrowing needs.

Real estate and utilities were among the few sectors to decline, as rising yields and inflation concerns typically weigh on rate-sensitive stocks.

The “Fear Gauge” (CBOE Volatility Index) dropped 4 points, reflecting investor optimism. Markets also rallied on the anticipation of a policy rate cut from the Federal Reserve, with the central bank widely expected to lower rates by 25 basis points. However, traders are now adjusting expectations for further cuts in the coming year.

Some stocks expected to perform well under Trump also saw gains, with Trump Media & Technology Group up 3% and Tesla climbing 14% amid Elon Musk’s vocal support for Trump’s campaign. On the other hand, renewable energy stocks dipped as investors shifted focus toward traditional energy firms.

With the Senate now controlled by Republicans, markets are also watching to see if the GOP secures a majority in the House, which would bolster Trump’s policy initiatives.