US benchmark equity indexes soared to all-time highs on Wednesday, with a significant surge in Treasury yields following Donald Trump’s victory in the presidential election. The Dow Jones Industrial Average surged 3.6%, closing at 43,729.9, while the Nasdaq Composite climbed 3% to finish at 18,983.5.
The S&P 500 also saw a notable increase of 2.5%, ending the day at 5,929. Financial sector stocks recorded the largest gains, rising by 6.2%, whereas the real estate sector faced a notable decline of 2.6%. Trump, the Republican nominee, won against Kamala Harris, the Democratic candidate and current vice president, during Tuesday’s election.
Investors are now closely monitoring the ramifications of Trump’s return to the White House, particularly with respect to potential new tariffs, the labor market effects resulting from immigration cuts, and perceived benefits for leading technology firms. Experts suggest that "US large-cap equities might gain from a combination of deregulation and anticipated tax cuts," as highlighted by Wells Fargo Investment Institute.
They also noted that smaller, domestic-focused companies could gain an edge from tariffs on imports. In the bond market, the US 10-year yield increased by 14.9 basis points to reach 4.44%, while the two-year yield rose by 7.3 basis points, closing at 4.28%. Meanwhile, the Federal Reserve commenced its two-day monetary policy meeting on Wednesday.
Markets appear to widely anticipate a 25 basis points reduction in interest rates on Thursday, as indicated by the CME FedWatch tool. "Following a substantial 50-basis-point cut in September, the Fed is expected to proceed towards easier monetary policy, albeit at a more measured pace, with a likely modest 25-basis-point cut this week," Stifel noted in a report distributed to clients.
In corporate news, shares of Tesla ($TSLA) soared nearly 15%, making it the top performer on the Nasdaq and one of the best on the S&P 500, spurred by the electoral outcome which bolstered expectations of favorable conditions for the electric vehicle manufacturer. Additionally, banking titans Goldman Sachs ($GS) and JPMorgan Chase ($JPM) experienced sharp gains of 13% and 12%, respectively, leading the Dow higher.
Conversely, Super Micro Computer ($SMCI) emerged as the worst performer on both the S&P 500 and Nasdaq, plummeting 18%. The AI server manufacturer had provided preliminary financial data for its fiscal first quarter late Tuesday while stating that a committee investigating concerns raised by accounting firm Ernst & Young found no evidence of fraud or misconduct.
Moreover, shares of International Flavors & Fragrances ($IFF) fell sharply, decreasing by 12% on Wednesday, making it among the steepest decliners on the S&P 500, after the company announced its third-quarter adjusted earnings fell short of analysts’ expectations. On the commodities front, West Texas Intermediate crude oil dipped 0.2% to $71.87 a barrel.
Analysts suggest that the incoming Trump administration could enforce stricter US oil sanctions against Iran. Additionally, commercial crude inventories in the US displayed an unexpected increase last week, as per government data. In other economic news, mortgage applications in the US fell for the sixth consecutive week, attributed to rising rates on 30-year fixed mortgage products, as reported by the Mortgage Bankers Association.
Lastly, gold prices dropped 2.9% to $2,670.40 per troy ounce, while silver saw a decline of 4.5%, finishing at $31.31 per ounce..