Trump Wins, Stocks Surge: What Investors Must Know

Stocks notched record highs on Wednesday following the re-election of Donald Trump within the presidential election. Each of the three major indices — the Dow Jones Industrial Average, broad-based S&P 500 and tech-heavy Nasdaq — climbed to all-time highs.

Analysts say the surge within the markets on Wednesday is driven by two aspects: Elimination of the uncertainty that held sway prior to the election, and the prospect of a business-friendly White House and Senate. (Control of the House of Representatives had not yet been determined as of Wednesday afternoon.)

“The mix of a Fed easing cycle, AI-driven technology boom and a pro-business administration is incredibly bullish for the stock market,” Jay Hatfield, CEO of Infrastructure Capital Advisors, said in an announcement.

Ads by Money. We could also be compensated in case you click this ad.Ad

The Russell 2000, an index of small-cap stocks, also surged on Wednesday on the idea that Trump-led tax and regulatory policies would especially profit smaller firms.

While the prospect of lower taxes and fewer regulations are driving stocks higher, analysts also warn that other pieces of Trump’s agenda — most notably tariffs — could blunt this economic momentum.

“The prospect of a Republican sweep and lower taxes is adding to the market enthusiasm,” Yung-Yu Ma, chief investment officer at BMO Wealth Management, said in an announcement. Ma added, though, that the exuberance could be short-lived. “Which will get tempered in the approaching weeks by more details regarding tariff policy or a continued rise in long-term Treasury yields,” he said, noting particularly that “uncertainty over tariffs” is a possible headwind.

While Trump is hardly in lockstep with the free-trade supporters that make up much of the Republican party, his penchant for rolling back or undoing regulations is benefiting sectors that may need experienced greater scrutiny under a Harris administration. Here’s what happened in the primary hours after markets opened post-election.

Banking

Stocks of each business and investment banks were gaining because the election results spread. JPMorgan Chase, Wells Fargo and Goldman Sachs all saw their stocks surge by double digits as of midday Wednesday.

BlackRock Investment Institute strategists said in a note that a Trump administration would likely be good for financial firms. “Trump’s win likely means some deregulation, including rolling back banking regulations,” Reuters reported.

Crypto

Bitcoin surged to a record high, touching $75,000 at one point. Other cryptocurrencies like ether also jumped, as did platforms for trading the assets like Coinbase and Robinhood.

The prospect of less regulation and lower taxes on the crypto industry, combined with the president-elect’s vocal support for cryptocurrency on the campaign trail, all pushed these assets higher, Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, told CNBC in an interview. Also boosting this sector is the expectation that Trump will replace Gary Gensler, the present chair of the U.S. Securities and Exchange Commission, who has been a thorn within the industry’s side during his tenure on the agency.

Chips

Shares of chip firms like Nvidia and Intel jumped. American chip manufacturers particularly would profit if Trump levies tariffs on chips imported from Taiwan, as he has suggested he would do.

Although Trump criticized President Joe Biden’s CHIPS and Science Act throughout the campaign, political and market observers expect the law, which advantages the domestic chip industry, to face. Republican lawmakers have criticized the laws, but much of the investment it triggered has taken place in GOP strongholds just like the Southeast. House Speaker Mike Johnson recently walked back a comment that Republicans would repeal the act if given the chance to accomplish that, saying as an alternative that he and his fellow Republicans desired to “streamline” it.

Big Tech

Web giants are more likely to experience a mixed bag under a Trump administration. On Wednesday, stocks of Google parent Alphabet and Amazon rose, while shares of Meta, the parent company of Facebook, Instagram and WhatsApp, fell. Although each Democratic and Republican lawmakers have criticized the dominance of tech giants, the expectation is that a Republican executive branch shall be less aggressive in pursuing antitrust and anti-competitive complaints against Big Tech firms, William Kovacic, a law professor at George Washington University and former chair of the Federal Trade Commission, told Reuters.

EV manufacturing

Despite the rhetoric from Trump — and other members of the Republican party — about dismantling President Biden’s signature Inflation Reduction Act, which included incentives for electric vehicle production, the fate of the EV market under a Trump presidency is unclear.

Trump is a giant booster of domestic oil production — and a beneficiary of those firms’ largesse with regards to political donations — and he has said he desires to roll back initiatives and incentives to ramp up EV production.

But on the day after the election, shares of EV heavyweight Tesla surged, jumping 13% on the expectation that the U.S.-based company would profit from potential tariffs on imported EVs and the rollback of subsidies that Tesla’s smaller competitors depend on more heavily.

What investors should do now

While surging stocks might make it tempting to purchase shares of Tesla or bitcoin, financial pros say it’s smarter to pump the brakes first. Advisers caution that it’s never a superb idea to make big, sudden changes to your investment plan based on one-time events.

This rally might be a superb time, though, to judge your asset allocation and determine in case you’re holding an excessive amount of of anyone sector or company. And in case you’re approaching retirement or anticipate a giant expense coming up soon, converting a few of your earnings into money or certificates of deposit might be a superb move.

Ads by Money. We could also be compensated in case you click this ad.Ad