Donald Trump’s return to the U.S. presidency on Wednesday sparked a major rally in equity markets, fueled by expectations of lower corporate taxes, favorable tariffs, and deregulation. Shares of banks, small-cap companies with a local focus, and Trump Media all saw significant gains.
Trump’s proposal to appoint Tesla CEO Elon Musk to head a government efficiency commission, after Musk supported Trump throughout his campaign, led to a 14.7% surge in Tesla’s stock.
Wall Street’s major indexes opened at record highs, and the Russell 2000 small-cap index surged by around 4%, hitting its highest point in nearly three years.
“The market believes a Donald presidency will reignite economic growth in the short-term through corporate tax relief and deregulation,” said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.
Trump Media & Technology Group, where Trump holds a majority stake, soared nearly 24% before trading was halted. Investors overlooked the company’s latest quarterly results, which showed minimal revenue of just $1 million.
The stock has more than tripled from its lows in late September, with Trump’s stake valued at about $4.8 billion. The company’s nearly $8.4 billion valuation is viewed by analysts as disconnected from its actual business performance.
Awaiting Policy Details
Trump’s Republican Party also secured control of the Senate and made gains in the House of Representatives, which could ease the passage of his legislative agenda and appointments.
“Markets have factored in a strong mandate for Republicans and are leaning toward supporting Trump-friendly trades,” said Scott Chronert, U.S. equity strategist at Citi. “Policy details will be crucial, as the market is focusing on deregulation, tax cuts, and a more business-friendly environment.”
Shares of major Wall Street banks—JPMorgan Chase, Bank of America, and Goldman Sachs—rose between 8% and 13.3%, driven by expectations of increased domestic investment and fewer regulatory hurdles boosting deal-making.
Trump’s pro-cryptocurrency stance helped push bitcoin to a record high, with crypto-related stocks like Coinbase, MicroStrategy, Riot Platforms, and MARA Holdings climbing between 10% and 19.7%.
Private prison operators Geo Group and CoreCivic surged about 28% each, as Donald pledge to crack down on illegal immigration could increase demand for detention facilities.
U.S. steelmakers Cleveland-Cliffs, Steel Dynamics, and Nucor jumped between 10.4% and 16.4%, as analysts noted that a Trump administration might increase protections for the domestic steel industry.
Autos, Energy, and China
While Tesla’s stock surged on the news of Musk’s proximity to Donald, other electric vehicle stocks dipped, as Trump indicated he might eliminate the $7,500 tax credit for EV purchases. Rivian Automotive fell 7.3%, and Nikola dropped about 6.2%.
“Tesla is the only EV maker making money, so removing the tax credit would further widen Tesla’s competitive advantage,” said Garrett Nelson, senior equity analyst at CFRA Research.
Shares of U.S. automakers Ford and General Motors rose by 3.4% and 1.7%, respectively.
Oil giant Chevron gained around 2%, while U.S. renewable energy companies like NextEra Energy and First Solar saw declines of 5.2% and 15.7%, respectively. Donald energy policy platform, focused on boosting U.S. fuel and power production, includes dismantling climate change initiatives from the previous administration.
Concerns over escalating tensions between the U.S. and China affected Chinese stocks, with the iShares MSCI China ETF dropping nearly 3.1%. Trump’s policy of imposing a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China is expected to have a significant global impact.
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