Wall Street is booming today following a decisive victory by former President Donald Trump as he trounced Vice President Kamala Harris in the Presidential election. Trump won both the Electoral College as well as the popular vote. At the same time, the Republicans captured the majority of the US Senate, and the House is poised to remain under the control of Republicans. A Red wave of sorts.
Markets catapulted higher as futures started creeping up last night before the race for Trump had been called. This morning, Dow futures displayed a 1200-point gain, and as markets ended regular trading, the gains now stand at around 1500 points higher. Record closes for the S&P and NASDAQ rounded out the bull stampede.
While many expected a tight race, reality proved different as the predicted “Blue Wall” fell to Trump supporters. The clear Trump victory diffused market risk and uncertainty with expectations of pro-growth policies, less costly regulation, and the possibility of a smaller government replacing concerns that a Harris government would deliver the exact opposite while ballooning the size of government even higher.
Elon Musk, owner of X, an EV entrepreneur, and space exploration enabler, committed to creating a new Department of Efficiency—where he has already publicly stated he saw at least $2 trillion in spending cuts—helped to mitigate concerns about the deficit, which has risen dramatically in recent years (including during the last Trump administration).
Musk shared a picture of him, Joe Rogen, and President-elect Trump deep in conversation where he declared the “future is going to be so ‘fire'”
🇺🇸🇺🇸The future is gonna be so 🔥 🇺🇸🇺🇸 pic.twitter.com/x56cqb6oT5
— Elon Musk (@elonmusk) November 6, 2024
So, what is trading higher?
CI reported this morning that Bitcoin and other cryptocurrencies rocketed to new highs. Trump has vocally supported digital asset innovation, in contrast to the current administration, which has sought to stifle crypto markets. All crypto firms are celebrating today. At last look, Bitcoin has hit a new all time high of over $76,000.
As for individual sectors of industry, financial services is having a gangbuster day. Goldman Sachs is trading over 13% higher when compared to market close yesterday. JP Morgan, Citi and Bank of America are joining the rally too with each rising by almost 12%, 8.5%, and 8.6%, respectively. A non hostile government combined with expectations of more growth is fueling this shares in financial services firms.
Other individual firms saw robust price increases like certain tech firms. Oil and gas firms are having a decent day, too, as Trump has been touting the fact that the US will pursue energy independence to a greater degree. The Drill Baby Drill trade.
As for private shares, a rising tide should lift all boats. Private securities have struggled the past couple of years for various reasons but an incoming administration that supports innovation should bode well for private firms and access to capital. The SBE Council issued a statement earlier today explaining that “Entrepreneurs want and need a policy environment that encourages investment, innovation, and growth. Not one that punishes them for succeeding, and creating jobs and financial prosperity for their communities and families.
The downside is that one day does not make a year, and today’s rally can lead to tomorrow’s bear. Markets will continue to be volatile, and the Fed is still in play as it seeks to enable growth without letting the inflation beast back out of the cage.
Geopolitical risks are huge, too. The new axis of evil—Russia, North Korea, Iran (and its proxies)—led by a chest-pounding China is incredibly concerning. The PROC, under the control of President Xi Jinping, has held onto its goal of “re-unifying” or taking over Taiwan by force if necessary. Many observers expect China to invade no later than 2027—and certainly before Xi gets too old. It is not clear if Trump is up to the task.
And then there are all of the promises Trump made during the election: no taxes on tips (Harris promised this, too), no taxes on overtime, lower corporate taxes, the elimination of SALT, and more. All of these require the help of Congress—not a foregone conclusion. The legislative branch will be pumping the brakes on policy regardless of who controls the House and Senate. Any tax changes will be a heavy lift.
Anyway, this election is over, and power was transferred peacefully. While a significant minority of the country is saddened and some are shocked, the majority has elected someone they believe will guide the country in a better direction.
