S&P 500, Dow futures surge to record high as Trump wins U.S. presidency
On Wednesday, futures related to the S&P 500 and the Dow reached all-time highs following the victory of Republican Donald Trump in the 2024 U.S. presidential election, marking his comeback four years after losing his position in the White House.
Wall Street is looking forward to the possibility of reduced taxes, fewer regulations, and a U.S. president who is quick to express opinions on a wide range of topics, including the stock market and the dollar.
Dow futures surged by over 1,200 points, and the futures for the S&P 500 approached the important milestone of 6,000.
Trump's win sparked a surge in investments related to his policies, while U.S. Treasury yields climbed sharply. Bitcoin reached an all-time high, and the dollar strengthened.
"He (Trump) has strong support and will act more swiftly than in the past. The market will adjust to this rapidly. What matters most is that the markets prefer clear information, and they have that now," stated Hendrik Du Toit, CEO of Ninety One.
Futures for the small-cap Russell 2000 have increased by 5.4%, reaching their highest point since early 2022. This surge is largely driven by domestic-focused companies anticipating advantages from a more relaxed regulatory and tax environment, along with reduced exposure to potential import tariffs.
Shares predicted to thrive during a second Trump administration surged.
Trump Media & Technology Group surged by 37%, and Tesla jumped by 13.2%, as its main shareholder and CEO Elon Musk has backed Trump during his election campaign.
Bank stocks surged as interest rates increased, and investors anticipated that these institutions would profit from reduced regulation. JPMorgan Chase jumped by 6.7%, Bank of America climbed by 6.9%, and the SPDR S&P Regional Banking ETF experienced an 8.9% gain.
There were notable increases in the stock prices of cryptocurrency businesses, energy companies, and private prison operators, but shares in the renewable energy sector decreased.
Attention shifted to the Republican Party's ability to keep a majority in the House of Representatives following their takeover of the U.S. Senate.
If one party achieves a "clean sweep" by winning the presidency, the House, and the Senate, it would make it simpler for Trump to advance the legislation he wants.
"The major concern for the markets at this moment is whether Trump's victory will lead to complete Republican dominance or result in a divided government," stated Russell Shor, a senior market expert at the trading platform Tradu.
"If Republicans gain control of both houses, Trump may have greater leeway to lower corporate taxes, which could enhance investor confidence."
The VIX, which gauges market fluctuations, fell significantly to its lowest point since September. Investors have been preparing for a period of uncertainty regarding the outcome of the presidential race.
Dow E-minis rose by 1,249 points, which is a 2.95% increase. S&P 500 E-minis saw an increase of 121.5 points, or 2.09%. Meanwhile, Nasdaq 100 E-minis climbed by 295.5 points, equating to a 1.45% rise.
Experts on Wall Street predict that Trump's proposals for limiting immigration, reducing taxes, and implementing significant tariffs will likely increase inflation and bond yields. At the same time, businesses may gain advantages from his tax and regulatory measures.
Later today, the Federal Reserve will kick off its two-day meeting, during which it is anticipated that the central bank will lower the benchmark interest rate by 25 basis points.
Bets on a rate cut in December have decreased a bit to 68% from almost 80% on Monday, according to CME FedWatch.
