[New York Stock Market] 3 Major Indexes Hit Record Highs on 'Trump Rally'... Trump Trade Explodes

Trump's Return... Republicans Expected to Sweep Senate and House
Uncertainty Resolved, Pro-Business Policies Revive Investor Sentiment
Tesla, Trump Media, Bitcoin Surge
Bond Yields and Dollar Rise in 'Trump Trade'

On the 6th (local time), when the election of former President Donald Trump, the Republican candidate, as the 47th President of the United States was confirmed, the U.S. New York stock market surged about 3%, hitting an all-time high. With the election uncertainty resolved, investor sentiment was greatly revived by Trump's pro-business policy pledges such as corporate tax cuts and deregulation. The 'Trump Trade' also exploded, with Trump beneficiary stocks like Tesla, Trump Media & Technology (DJT), and Bitcoin soaring, along with a surge in Treasury yields and the dollar's value.

On that day, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 43,729.93, up 1,508.05 points (3.57%) from the previous trading day. It was the first time in two years since November 2022 that the Dow Jones rose more than 1,000 points in a single day. The S&P 500, focused on large-cap stocks, rose 146.28 points (2.53%) to 5,929.04, and the tech-heavy Nasdaq rose 544.29 points (2.95%) to 18,983.47. Thus, all three major indices hit record highs.

Trump's return to the White House, promising pro-business policies, acted as the driving force behind the sharp rise in stock prices. In the congressional elections held alongside the presidential election the day before, the Republican Party is highly likely to sweep the majority in both the House and Senate. This implies that significant policy changes in government spending and taxation could occur with the start of Trump's second term. 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 House and Senate exists," adding, "If this scenario materializes, the U.S. economy will truly leap forward."

On that day, Trump beneficiary stocks surged. Tesla rose 14.75%. Tesla has been considered a representative Trump beneficiary stock as its CEO, Elon Musk, has been fully committed to Trump's election. DJT, the operator of Truth Social, a social networking service owned by former President Trump, rose 5.94%. Bank stocks also showed strength as high interest rates were expected with Trump's election. JP Morgan jumped 11.51%, while Bank of America (BoA) and Wells Fargo surged 8.4% and 13.11%, respectively.

Trump's tax cuts and protectionist pledges are expected to greatly benefit companies, which also pushed up small and mid-cap stocks. The Russell 2000 Index, composed mainly of small and mid-cap stocks, rose 5.84%.

The price of Bitcoin, a representative asset of the Trump Trade, also soared. According to Coinbase, as of 4:27 p.m. Eastern Time, Bitcoin was trading around $75,972, up 9.3% from the previous trading day. It surpassed $75,000 for the first time ever. Other cryptocurrencies such as Ethereum and Solana surged 11.41% and 14.56%, respectively.

The Trump Trade is also spreading in the bond and foreign exchange markets. U.S. Treasury yields and the dollar value, which have risen whenever Trump's chances of winning increased, are currently climbing. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 14 basis points (1bp=0.01 percentage point) to 4.43%, and the 2-year Treasury yield, sensitive to monetary policy, rose 7 basis points to 4.27%. The Dollar Index, which measures the dollar's value against six major currencies, fluctuated around 105.03, up 1.66% from the previous day. The market expects that Trump's promised tariff hikes and large-scale tax cuts will lead to inflation and fiscal deficits, pushing up interest rates and the dollar's value.

Wall Street expects the Trump rally to continue for some time.

Mark Pinto, U.S. equity chief at Janus Henderson Investors, said, "Trump supports corporate tax rate cuts, deregulation, and industrial policies favorable to domestic growth," adding, "This can further activate the U.S. economy and benefit risk assets." He also forecasted, "After the 2016 election, the S&P 500 rose 5% by the end of the year, and a similar trend is expected this time."

David VanSen, Chief Investment Officer (CIO) of The VanSen Group, analyzed, "Current investor sentiment is that (Trump's election) 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."

International oil prices fell. West Texas Intermediate (WTI) crude oil closed at $71.69 per barrel, down $0.30 (0.42%) from the previous trading day, and Brent crude, the global oil price benchmark, closed at $74.92 per barrel, down $0.61 (0.81%).

Meanwhile, according to AP News and others, as of 4:41 p.m. Eastern Time on the 6th, former President Trump secured 292 electoral votes, far ahead of Vice President Harris's 224. The night before, Trump had early victories in two southern Sun Belt battleground states, Georgia and North Carolina, and secured Pennsylvania, the largest battleground state, securing the 'magic number' of 270 electoral votes out of 538, deciding his path to the White House. Subsequently, he sealed a landslide victory by winning Michigan and Wisconsin, also part of the Rust Belt, along with Pennsylvania. In the congressional elections held alongside the presidential election, the Republican Party is expected to regain the majority in the Senate and sweep the House as well. Currently, the Republicans hold 201 seats in the House, just 17 short of the majority of 218 seats. The Democrats hold 186 seats in the House.