Stocks and bitcoin rise after Trump's victory. This also applies to concerns about inflation now that the Dow Jones index has risen by 1,500 points

Stan Choe
| Associated press

New York – The US stock market, Elon Musk’s Tesla, banks and bitcoin all stormed higher on Wednesday as investors bet on what Donald Trump’s return to the White House will mean for the economy and the world. Losers, according to the market, include solar companies and possibly anyone concerned about higher inflation.

The S&P 500 rose 2.5% for its best day in almost two years. The Dow Jones Industrial Average rose 1,508 points, or 3.6%, while the Nasdaq composite rose 3%. All three indexes surpassed the records they set in recent weeks.

Historically, the US stock market has tended to rise regardless of which party wins the White House, with Democrats posting larger gains on average since 1945. But Republican control could mean big shifts in the winning and losing industries beneath the surface, and investors are increasing their bets. rather, building on what the higher rates, lower tax rates and lighter regulations that Trump favors will mean.

“Markets are struggling to figure out what will happen next, but for now the market is pricing in higher growth and higher inflation prospects,” said Peter Esho of Esho Capital.

Of course, how much change Trump brings about in his second term will likely depend on whether his fellow Republicans win control of Congress, and that has yet to be determined. That could leave room for a pullback in some of Wednesday’s big shock moves.

Nevertheless, after Trump’s dramatic victory, the market is divided between fairly clear winners and losers. Among them:

Bank stocks, UP

Bank stocks led the market higher, partly on hopes that a stronger economy would mean more customers would get loans and pay them back with interest. They also hoped for lighter regulations from a Republican White House. JPMorgan Chase rose 11.5%, and financial stocks had by far the biggest gains among the 11 sectors that make up the S&P 500. Capital One Financial climbed 15%, and Discover Financial rose 20.2%, which was one of the market’s biggest gains based on speculation for some time to come. merger will more easily receive federal approval under Trump.

Crypto, OP

Trump has promised to make the country “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. Bitcoin’s price hit an all-time high above $76,480, according to CoinDesk, and was recently just below $76,100. Companies in the crypto industry also jumped, including trading platform Coinbase’s 31.1% jump.

Tesla, OP

Musk has become a close ally of Trump and is egging on the former president. While Trump could ultimately hurt the electric car industry broadly by limiting government subsidies, analysts say Tesla could gain somewhat of an advantage by already being such a big player in the sector. Tesla rose 14.8%, while rival Rivian Automotive fell 8.3%.

Trump Media & Technology Group, UP

The company behind Trump’s Truth Social platform rose 5.9%, after nearly 35% earlier in the day. It regularly trades more on Trump’s popularity than on profit prospects. The increase came even after it filed unaudited financial documents with regulators on Tuesday, saying it lost $19.2 million in the latest quarter and that sales had weakened from a year earlier.

Private Prison Operators, UP

A Trump-led Washington could push for stricter enforcement of the nation’s borders, which could mean more business for companies that work with U.S. Immigration and Customs Enforcement (ICE). GEO Group, which operates ICE processing centers, rose 42.1%.

Smaller company stocks, UP

Trump’s America-First policy could help companies that focus on customers in the United States, rather than large multinationals that could be hit by higher tariffs and protectionism. The Russell 2000 index of smaller stocks, seen as more domestically focused than the big stocks in the S&P 500, rose 5.8%. That was more than double the S&P 500’s gain.

Government bond prices, DOWN

Investors see that Trump’s policies could potentially lead to stronger economic growth, which will push down government bond prices and raise yields. Tax cuts under Trump could also further increase the US government’s budget deficit, increasing borrowing needs and driving interest rates up even further. The yield on the 10-year government bond rose to 4.43% from 4.29% late Tuesday, an important step for the bond market. It has increased significantly from August, when it was below 4%.

Inflation concerns, UP

Investors also see that Trump’s policies are likely to contribute to future inflation, especially tariffs, which could increase U.S. household bills.

“Trump continues to openly tell people that he will raise tariffs not just on China, but on all trading partners,” said Andrzej Skiba, head of BlueBay US Fixed Income at RBC Global Asset Management. “We are talking about 10% tariffs for all global partners. This is a big problem because it could increase inflation by 1%. If you add 1% to the inflation figures next year, we will have to say goodbye to interest rate cuts.”

A decline in immigration could also lead to a shortage of available workers for employers, which could force companies to increase wages for workers more quickly and put more upward pressure on inflation.

Expectations for rate cuts, muddled

Much of Wall Street’s record push this year was based on expectations of upcoming Federal Reserve rate cuts as inflation appears to be heading back toward the 2% target. Looser interest rates help boost the economy, but can also fuel inflation.

The Fed will announce its latest interest rate decision on Thursday, with a cut still expected, according to data from CME Group. But traders have already reversed forecasts about how many cuts the Fed will implement by the middle of next year.

Foreign currency, DOWN against the dollar

Trump has vowed to sharply raise tariffs on imports from China, Mexico and other countries, raising concerns about trade wars and disruptions to the global economy. A measure of the value of the U.S. dollar against several major currencies rose 1.6%, meaning those other currencies fell.

The euro fell 1.5%, and the South Korean won 1.2%. The Mexican peso, which has been falling against the dollar since the summer partly due to concerns about Trump’s possible re-election, fell early in the day but then lost value. loss.

Renewable energy stocks, DOWN

Trump is a fan of fossil fuels and encourages the production of oil and natural gas. His win sent solar stocks sharply lower, including a 10.1% decline for First Solar and a 16.8% decline for Enphase Energy.

The only stock with a bigger loss in the S&P 500 was Super Micro Computer, which said its latest quarter revenue could come in below its previous forecast. The stock fell 18.1%.

All told, the S&P 500 rose 146.28 points to 5,929.04. The Dow Jones index rose 1,508.05 to 43,729.93, and the Nasdaq index rose 544.29 to 18,983.47.