Stocks, Dollar, Bitcoin Rise as Trump Wins Second Term

Stocks rallied at Wednesday’s New York market open after Donald Trump claimed victory in the 2024 US presidential election.

Leading the gains following the election results were financial and energy stocks, as well as small company stocks.

The Dow Jones Index jumped 3%, while the broader S&P 500 rose 2% and the tech-heavy Nasdaq 100 rose 2.3%. The small-cap benchmark Russell 2000, another projected Trump beneficiary, rallied 4.5% as of 11:30 a.m. EST.

At the same time, the US dollar index hit its highest point since July, rallying against other global currencies, while the euro fell.

In the bond market, yields jumped. Investors here have been increasingly concerned about growing US federal budget deficits.

Forward Visibility Relieves Markets

“With the Republican Party on the cusp of a clean sweep of Congress and the presidency, US markets are rallying. This is less an endorsement of every facet of the Republican manifesto and more because markets like visibility, and clear governmental control provides that,” explains Michael Field, European market strategist at Morningstar.

Stocks investors expect to benefit from a business-friendly regulatory environment saw dramatic gains, with financials up roughly 6.0% and energy up 3.7%. Solar energy stocks and utilities struggled.

Cryptocurrencies, considered part of the so-called Trump trade, also rallied. Bitcoin briefly surpassed $75,000, topping its previous all-time peak reached in March. Trump has voiced his support of cryptocurrencies in the past.

Other popular picks within the Trump trade also outperformed. Trump Media & Technology Group DJT rose as high as 14% in regular trading after soaring more than 30% in the premarket, but it pared back to gains of roughly 6% by midday. Meanwhile, Tesla TSLA, headed by vocal Trump supporter and donor Elon Musk, rose 13%.

The 10-year Treasury yield jumped to around 4.47% Wednesday morning from 4.26% Tuesday on speculation that Trump’s proposed tax cuts and other spending plans would increase the fiscal deficit, while possible tariffs could reignite inflation.

In the background, investors expect that if the Republican Party claims control of Congress, this could lead to substantial corporate tax rate cuts and lessened regulatory pressures.

European Equities First Rally, Then Retreat

European stocks in the Morningstar Developed Markets Europe 100 Index turned negative after initially rising 2%. Automotive and renewable stocks led declines in Europe on the expected impact of tariffs, while pharmaceutical stocks with US exposure rose.

According to Janus Henderson multi-asset portfolio manager Oliver Blackburn, “perhaps the most surprising outcome so far is the strength of stock markets outside the US. European and Japanese equities are performing well, and the downside in China is perhaps less than many had feared, despite the incoming president’s threats to global trade.”

Thematic ETFs in Europe reflected the expected policy changes in the Trump administration. Funds exposed to cybersecurity and cloud computing rallied, while Chinese tech and renewable energy ETFs fell. L&G Cybersecurity ISPY and WisdomTree Cloud Computing WCLD (both of which have Bronze Medalist Ratings) were the biggest thematic gainers, with L&G up 5.7% and WisdomTree up 4.0%. KraneShares CSI China Internet KWEB (rated Neutral) and Global X Solar RAYS (Negative) lost more than 1% on the day.

“We are likely in for a busy four years, with Trump knowing that he needs to hit the ground running and get policy changes done while Republicans control the two houses,” Field said. “The euro is down, and rightly so, given the likelihood of at least some of these policies negatively affecting the region. Expect a brief pause after the results, before the real action begins. ”