Bitcoin and stocks rise following Trump’s win. Do you worry about inflation now that the Dow is up 1,500?
NEW YORK (TAT) — Bitcoin, banks, Elon Musk’s Tesla, and the U.S. stock market all surged higher on Wednesday as investors placed bets on the global and economic effects of Donald Trump’s return to the White House. The market identifies the renewable energy sector and possibly anyone concerned about rising inflation as losers.
The S&P 500 had its best day in over two years with a 2.5% rally. The Nasdaq composite soared 3%, and the Dow Jones Industrial Average jumped 1,508 points, or 3.6%. In recent weeks, all three indexes broke previous records.
Regardless of the party that wins the presidency, the U.S. stock market has typically tended to rise, with Democrats seeing larger average gains since 1945. However, under the surface, Republican rule may result in significant changes to the profitable and unprofitable industries, and investors are increasing their wagers on the effects of Trump’s preferred higher tariffs, lower tax rates, and less regulation.
According to Peter Esho of Esho Capital, “the market is pricing in a higher growth and higher inflation outlook for the time being, but the markets are rushing to figure out what happens next.”
Of course, it remains to be seen whether Trump’s own Republicans take control of Congress, which will likely determine how much change he makes in his second term. That might allow for some of Wednesday’s big, impulsive movements to be snapped back.
However, in the wake of Trump’s stunning victory, the market is splitting between quite obvious winners and losers. Among them:
UP for bank stocks: Bitcoin and stocks rise following Trump’s win
Due in part to expectations that a more robust economy would result in more consumers taking out loans and repaying them with interest, bank stocks drove the market upward. They also came together with the expectation that a Republican White House would enact less regulation.
Among the 11 sectors that comprise the S&P 500, banking companies saw the largest gain, with JPMorgan Chase rising 11.5%. Amid rumors that their impending merger might receive easier federal approval under Trump, Capital One Financial and Discover Financial saw some of the largest market gains, rising 15% and 20.2%, respectively.
UP, Crypto- Bitcoin and stocks rise following Trump’s win
Trump has promised to establish a “strategic reserve” of bitcoin and turn the US into “the crypto capital of the planet.” According to CoinDesk, the price of bitcoin recently hovered slightly below $76,100 after reaching an all-time high above $76,480. Crypto companies also surged, with trading platform Coinbase seeing a 31.1% increase.
UP, Tesla: Bitcoin and stocks rise following Trump’s win
Musk is now a close Trump buddy who supports the former president’s candidacy. Although Trump’s decision to reduce government subsidies may ultimately harm the electric vehicle sector as a whole, analysts believe Tesla may benefit from its current position as a major participant in the market. While rival Rivian Automotive saw an 8.3% decline, Tesla saw a 14.8% increase in revenue.
Group for Trump Media & Technology, UP : Bitcoin and stocks rise following Trump’s win
Following a nearly 35% gain earlier in the day, the business that powers Trump’s Truth Social platform saw a 5.9% increase. It frequently makes more deals based on Trump’s popularity than on its potential for financial gain. Its increase occurred even after it reported to regulators on Tuesday that it lost $19.2 million in the most recent quarter and that its sales had declined from a year earlier in unaudited financial filings.
operators of private prisons, UP: Bitcoin and stocks rise following Trump’s win
Businesses that collaborate with U.S. Immigration and Customs Enforcement, or ICE, may see an increase in business if a Trump-led Washington pushes for more border enforcement. The ICE processing facility operator, GEO Group, saw a 42.1% increase.
Smaller company stocks, UP: Bitcoin and stocks rise following Trump’s win
Trump’s America-First policy may benefit businesses that target US consumers rather than large global corporations that may suffer from higher tariffs and protectionism. Compared to the large stocks in the S&P 500, the Russell 2000 index of smaller stocks, which are thought to be more locally focused, increased by 5.8%. That was more than double the rise of the S&P 500.
Prices of Treasury bonds are declining: Bitcoin and stocks rise following Trump’s win
Trump’s plans are seen by investors as having the ability to boost economic growth, which lowers Treasury bond prices and raises yields. The U.S. government’s deficit could grow even more as a result of Trump’s tax cuts, increasing the need for borrowing and driving up yields. A significant change for the bond market occurred late Tuesday when the yield on the 10-year Treasury increased from 4.29% to 4.43%. Compared to August, when it was less than 4%, it is significantly higher now.
Concerns about inflation, UP: Bitcoin and stocks rise following Trump’s win
Investors also believe that Trump’s policies—especially tariffs, which can raise the cost of living expenses for American households—will probably contribute to future inflation.
“Trump consistently makes it clear that he will raise tariffs on all trading partners, not just China,” stated Andrzej Skiba, who leads RBC Global Asset Management’s BlueBay U.S. Fixed Income division. 10% tariffs on all international partners are what we’re discussing. This is significant since it has the potential to raise inflation by 1%. We should abandon rate decreases if the inflation figures for the following year increase by 1%.
A decline in immigration may also result in a shortage of workers for employers, which would compel them to increase worker wages more quickly and drive up inflation.
Interest rate reduction expectations, MUDDLED: Bitcoin and stocks rise following Trump’s win
Expectations of further interest rate reduction by the Federal Reserve, now that inflation appears to be returning to its 2% objective, were a major factor in Wall Street’s run to records this year. While lower interest rates are good for the economy, they can also fuel inflation.
According to CME Group data, the Fed is still expected to decrease interest rates when it makes its most recent decision on Thursday. However, traders have already lowered their projections for the number of cuts the Fed will make until the middle of next year.
Foreign exchange rates, declining in relation to the US dollar: Bitcoin and stocks rise following Trump’s win
Concerns about trade wars and economic disruptions around the world have been raised by Trump’s pledge to drastically increase tariffs on imports from China, Mexico, and other nations. The value of the U.S. dollar increased 1.6% relative to a number of other currencies, indicating a decline in those other currencies.
The South Korean won dropped 1.2%, and the euro dropped 1.5%. Early in the day, the Mexican peso, which has been depreciating against the dollar throughout the summer due in part to concerns about a potential Trump reelection, lost ground before recovering.
Stocks of renewable energy are declining: Bitcoin and stocks rise following Trump’s win
Trump supports the production of natural gas and oil because he is a fossil fuel enthusiast. His victory caused solar stocks to plummet, with First Solar’s stock falling 10.1% and Enphase Energy’s stock falling 16.8%.
Super Micro Computer, which stated that its revenues for the most recent quarter would fall short of its previous projection, was the only stock in the S&P 500 to have a greater loss. Its shares fell 18.1%.
The S&P 500 increased 146.28 points to 5,929.04 overall. The Nasdaq composite soared 544.29 to 18,983.47, while the Dow soared 1,508.05 to 43,729.93.
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