Dow set to surge more than 1,200 points as Trump is re-elected
New York
CNN
—
Markets were set to rise sharply Wednesday morning following a shift toward Republicans, including a decisive and significant re-election of former President Donald Trump in Tuesday's election.
Dow futures soared 1,200 points, or 2.9%. The broader S&P 500 was 2.3% higher and the tech-heavy Nasdaq surged 1.8%.
Trump flipped several swing states from President Joe Biden's 2020 victory, and Republicans also took control of the Senate. Several key House races remain undecided. A so-called red wave could usher in an era of deregulation and other pro-business laws and policies that investors believe could benefit the stock market.
However, Trump has advocated for policies, including tax breaks and increased public spending, that could significantly increase America's budget deficit. That devalued US Treasury bonds, and so yields, which trade in the opposite direction of bond prices, surged.
The 10-year bond yield rose above 4.4%, undercutting the US Federal Reserve's efforts to lower interest rates to boost the economy. The Fed had been hiking rates over the past couple of years to combat a devastating inflation surge. But it began cutting rates in September and is widely expected to cut again Thursday at the conclusion of its two-day policy meeting.
Although the Fed funds rate can influence Treasury yields, consumer loans, including mortgage rates, auto loans and credit cards, are tied more closely to Treasury yields. So Trump's victory, at least for now, appears to be keeping those rates somewhat higher.
Other so-called Trump trades, including shares of his social media stock, Trump Media and Technology Group, surged Wednesday morning. TMTG shares, which trade under the "DJT" symbol, soared 30%.
The US dollar also rose 1.7% against the euro and British pound to its highest level since July. The dollar could benefit from Trump's radical plan to increase tariffs significantly, perhaps creating more demand for US goods at home, although most economists oppose the plan and many suggest that it won't change consumer behavior.
Trump's tariff plan could, however, boost inflation, and that could also undercut the Fed's rate-cutting efforts.
Bitcoin also rocketed to a new high near $74,000 Wednesday morning. Trump has warmed up to cryptocurrencies in recent months after broadly opposing them in his first term. Cryptos have surged as Trump's re-election chances appeared to increase.
