New York Stock Market Surges on Trump Election... 3 Major Indexes Reach All-Time Highs

Republicans May Sweep Congress with Trump’s Return
Election Uncertainty Eased, Pro-Business Policies Boost Investor Sentiment
Trump Media and Tesla Rise... Trump Trade Explodes
US 10-Year Treasury Yield Jumps 18bp... Dollar Up

With former President Donald Trump winning re-election, the three major U.S. stock indices surged sharply in early trading on the 6th (local time) in New York. The resolution of election uncertainty, along with expectations that Trump's pro-business policies such as corporate tax cuts and deregulation will lead to increased corporate profits and rising stock prices, are stimulating investor sentiment. The 'Trump trade' is also spreading, with rising Treasury yields and dollar value.

At 9:52 a.m. in New York stock market on the day, the Dow Jones Industrial Average, centered on blue-chip stocks, surged 2.82% from the previous trading day to 43,411.73, setting a new all-time high. The S&P 500, focused on large-cap stocks, rose 1.64% to 5,877.75, and the Nasdaq Composite, centered on tech stocks, climbed 1.71% to 18,755.31, also hitting record highs.

The resolution of election uncertainty following Trump's victory and his pro-business policies are pushing stock prices higher. In the 47th U.S. presidential election held the day before, Republican candidate Trump won a landslide victory over Democratic candidate Vice President Kamala Harris, returning to the White House after four years. According to AP, as of 9:32 a.m. Eastern Time, Trump secured 277 electoral votes out of a total of 538, surpassing Vice President Harris and winning the election. It is also expected that the Republican Party will fully control Congress. In the Senate and House elections held alongside the presidential election, the Republicans secured the majority in the Senate and are currently poised to take control of the House as well. This implies that significant policy changes in government spending and taxation may occur.

With the reality of Trump's second term taking shape, the Trump trade is becoming prominent in the market. Among individual stocks, Trump Media & Technology (DJT) is up 10.81%. DJT is the operator of Truth Social, a social networking service owned by former President Trump. Tesla, whose CEO Elon Musk has long declared support for Trump and bet on his victory, is also up 10.02%. Bank stocks are also strong as high interest rates are expected with Trump's victory. JPMorgan rose 8.35%, while Bank of America (BoA) and Wells Fargo increased by 6.65% and 11.63%, respectively.

Expectations that companies will benefit greatly from Trump's tax cuts and protectionist pledges are also pushing the Russell 2000 index, which focuses on small and mid-cap stocks, up by more than 4%.

Bitcoin, a representative asset of the Trump trade, is also strong. According to Coinbase, as of 9:36 p.m. Eastern Time, Bitcoin rose 7.05% from the previous trading day to $74,647, surpassing the $74,000 level for the first time ever. It briefly exceeded $75,000 before slightly retreating.

The Trump trade is also evident in the bond and foreign exchange markets. U.S. Treasury yields and the dollar value, which have risen whenever Trump's chances increased, showed strength on this day. The U.S. 10-year Treasury yield, a global bond yield benchmark, surged 18 basis points (1 bp = 0.01 percentage point) from the previous day to 4.47%, while the 2-year Treasury yield, sensitive to monetary policy, rose 8 basis points to 4.28%. The dollar index, which measures the dollar's value against six major currencies, fluctuated around 105.24, up 1.86% from the previous day. The market expects that Trump's promised tariff hikes and tax cuts will lead to inflation and a widening fiscal deficit, stimulating interest rates and the dollar's value.

Wall Street expects the bull market to continue for the time being. David Bensen, Chief Investment Officer (CIO) of The Bensen Group, analyzed, "Current investor sentiment is that (Trump's victory) means growth, deregulation, and market friendliness," adding, "Expectations of increased mergers and acquisitions (M&A), expanded and extended tax cuts are strong factors driving stocks higher."

Mark Mobius, Chairman of Mobius Emerging Opportunities Fund, said, "Not only Trump's presidential victory but also the possibility of the Republican Party winning both the Senate and the House," adding, "If this scenario materializes, the U.S. economy will truly leap forward."

The market is also paying attention to the Federal Open Market Committee (FOMC) regular meeting of the U.S. Federal Reserve (Fed), held over two days starting on this day. After the Fed cut the benchmark interest rate from 5.25-5.5% to 4.75-5.0% in September for the first time, it is expected to cut rates again by 0.25 percentage points in November. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market is pricing in a 99.2% chance of a 0.25 percentage point rate cut at the November FOMC meeting. Former President Trump has repeatedly pledged to replace Fed Chair Jerome Powell if re-elected. Investors are expected to focus on any hints Chair Powell might give regarding the pace of future rate cuts.

International oil prices are falling. This is due to concerns that Trump's tariff hike pledge on China could lead to a slowdown in the Chinese economy and oil demand. West Texas Intermediate (WTI) crude oil is trading at $70.37 per barrel, down $1.62 (2.3%) from the previous day, while Brent crude, the global oil price benchmark, is down $1.51 (2%) at $74.02 per barrel.