The U.S. stock market, Elon Musk’s Tesla, major banks, and especially bitcoin, all saw remarkable gains yesterday as investors rallied around what Donald Trump’s potential return to the White House could mean for the economy. The winners: banks, crypto, and certain big tech stocks. The losers? The renewable energy sector and anyone concerned about rising inflation.
S&P, Dow, and Nasdaq Reach New Highs
On Wednesday, the day after the election, the S&P 500 jumped 2.5% in its best day in nearly two years. The Dow Jones Industrial Average soared 1,508 points (3.6%), and the Nasdaq composite gained 3%, with all three indexes setting new records. By Friday, the momentum continued with the S&P 500 rising another 0.4%, crossing the 6,000 mark for the first time, while the Dow climbed another 259 points (0.6%) and the Nasdaq added 0.1% to its gains from earlier in the week.
Sectors Poised for Shifts Under Republican Control
Historically, the U.S. stock market rises regardless of the party in control of the White House, though Democrats have often seen bigger average gains since 1945. However, Republican policies could create distinct winners and losers in certain sectors. Investors are betting that Trump’s favored policies—higher tariffs, lower taxes, and lighter regulation—will drive growth, though potentially with more inflation.
“Markets are scrambling to figure out what happens next, but for now, they’re pricing in a higher growth and higher inflation outlook,” said Peter Esho of Esho Capital.
Winners and Losers
Bank Stocks Surge
Bank stocks led the market, driven by hopes of a stronger economy with more lending and lighter regulation under a Republican administration. JPMorgan Chase jumped 11.5%, with Capital One Financial and Discover Financialclimbing 15% and 20.2%, respectively, boosted by speculation that their pending merger could sail through federal approval.
Crypto Soars with Trump’s Endorsement
Trump’s vision to make the U.S. the “crypto capital of the planet” sparked a surge in bitcoin, hitting an all-time high above $76,480 on Wednesday, before touching $77,000 on Friday. Coinbase also leaped 31.1%, riding the wave of Trump’s pro-crypto stance.
Tesla Takes Off
A close Trump ally, Elon Musk saw his Tesla stock jump 14.8% on Wednesday and another 8% on Friday, reaching a record $321 and helping Tesla hit a $1 trillion market cap. Musk’s net worth swelled by $35 billion in three days, pushing his wealth over $300 billion.
Trump Media & Technology Group Rises
Trump’s Truth Social parent company rose 5.9% following a 35% jump on Wednesday, though its stock fluctuated. Despite recent losses, it hit a new high on Friday, driven more by Trump’s popularity than by profitability.
Private-Prison Stocks Gain
Private-prison operators like GEO Group, closely tied to ICE, surged 42.1%, as Trump’s policies could favor stricter immigration enforcement.
Small-Cap Stocks Climb
Trump’s America-First policies benefited domestically focused companies, with the Russell 2000 index of smaller stocks jumping 5.8%, more than double the S&P 500’s gain.
Treasury Bonds Fall
Bond prices fell as investors anticipated stronger growth under Trump’s policies, raising yields. The 10-year Treasury yield increased from 4.29% to 4.43%.
Inflation Concerns Mount
Higher tariffs and potential worker shortages could boost inflation, adding an estimated 1% to inflation rates. Andrzej Skiba of BlueBay U.S. Fixed Income warned, “Trump’s tariffs could add 1% to inflation, potentially ending rate cuts.”
Interest Rate Cuts Remain Uncertain
While Wall Street has banked on rate cuts, Trump’s policies could spark inflation, possibly limiting the Federal Reserve’s cuts.
Dollar Strengthens Against Foreign Currencies
The dollar surged as Trump’s tariffs raised concerns about trade disruptions. The euro dropped 1.5%, while the South Korean won fell 1.2%.
Renewable Energy Stocks Dip
Fossil-fuel-friendly policies weighed on renewable stocks, with First Solar down 10.1% and Enphase Energy dropping 16.8%.
Market Close Summary
- S&P 500 rose 146.28 points to 5,929.04
- Dow Jones climbed 1,508.05 points to 43,729.93
- Nasdaq increased 544.29 points to 18,983.47
