U.S. stock markets soared to record levels on Wednesday, driven by investor reaction to Donald Trump’s re-election victory over Kamala Harris. A decisive win in Wisconsin confirmed Trump’s return to the White House, propelling a strong market rally as investors assessed the implications of his policies.
The Dow Jones Industrial Average surged 3.5%, or about 1,500 points, marking its best day since 2022 and closing at an all-time high. The S&P 500 jumped 2.5% to surpass the 5,900 mark, while the Nasdaq Composite gained 2.9%, both setting new records.
In bond markets, the 10-year Treasury yield rose by 13 basis points to 4.43%, reflecting expectations for growth and inflation. Bitcoin also hit a record high, supported by a surge in the dollar, as investors renewed enthusiasm for the so-called “Trump trade.”
Republican gains extended beyond the presidential race, with the party also flipping control of the Senate. However, the outcome of the House races remains uncertain and may take days or even weeks to finalize.
Banking stocks rallied significantly on expectations that Trump’s policies will favor the financial sector. The S&P Regional Banking ETF (KRE) rose more than 11%, while the small-cap Russell 2000 index, which includes several regional banks, climbed over 5%.
Tesla stock surged over 14%, spurred by CEO Elon Musk’s support for Trump during the campaign. Meanwhile, the Federal Reserve’s two-day meeting on rate policy commenced, with markets widely expecting a 25-basis-point rate cut announcement on Thursday. According to the CME FedWatch Tool, there is a 99% probability that the Fed will lower rates, a move anticipated to further stimulate economic growth.
