U.S. benchmark equity indexes reached record highs on Wednesday as Treasury yields soared following Donald Trump’s presidential election victory. The Dow Jones Industrial Average rose by 3.6% to reach 43,729.9, and the Nasdaq Composite climbed 3% to 18,983.5. The S&P 500 experienced a 2.5% increase, closing at 5,929.
In sector performance, financial stocks posted the largest gains, increasing by 6.2%, whereas real estate suffered the most significant decline, dropping 2.6%. Trump, representing the Republican party, emerged victorious over Kamala Harris, the Democratic candidate and current vice president, during the voting process on Tuesday.
Investors are now closely monitoring the potential implications of new tariffs, changes in the labor market due to immigration policy adjustments, and the possible benefits that could arise for leading technology firms. "U.S. large-cap equities may gain from a mix of deregulation and further tax cuts, which could be on the horizon," stated Wells Fargo Investment Institute.
"Conversely, smaller companies focused on domestic operations might find themselves disadvantaged by tariffs on imports." The yield on the 10-year U.S. Treasury bond surged by 14.5 basis points, reaching 4.43%, while the two-year yield increased by 6.7 basis points to 4.27%. The Federal Reserve commenced a two-day monetary policy meeting, with a general expectation among market participants that a 25 basis point reduction in interest rates will occur on Thursday, based on the CME FedWatch tool. "After an aggressive (50-basis-point) cut in September, the Fed is anticipated to pursue a more gradual easing in its monetary policy, signaling a more moderated approach with this week's (25-basis-point) adjustment," noted Stifel in a report to clients on Wednesday. In corporate news, shares of Tesla ($TSLA) skyrocketed nearly 15%, making it the top performer on the Nasdaq and among the best on the S&P 500, as the election results prompted speculation that the electric vehicle manufacturer stands to benefit from Trump’s victory. Banking heavyweights Goldman Sachs ($GS) and JPMorgan Chase ($JPM) also saw substantial gains, with their shares rising 13% and 12%, respectively, making them the leading gainers on the Dow. In contrast, Super Micro Computer ($SMCI) suffered the worst performance on both the S&P 500 and the Nasdaq, witnessing an 18% decline.
This came after the artificial intelligence server company released interim financial data for its fiscal first quarter and stated that a committee investigating concerns raised by accounting firm Ernst & Young regarding governance found no evidence of fraud or wrongdoing. International Flavors & Fragrances ($IFF) experienced a 12% drop on Wednesday, becoming one of the steepest decliners on the S&P 500 after reporting third-quarter adjusted earnings that failed to meet Wall Street predictions. In commodity news, West Texas Intermediate crude oil fell by 0.3% to $71.81 a barrel.
Analysts suggest that the incoming Trump administration might impose tighter U.S. oil sanctions against Iran. The most recent government data indicated an unexpected increase in commercial crude stockpiles within the United States. On the economic front, mortgage applications in the U.S. declined for the sixth week in a row as interest rates on 30-year fixed mortgages have risen, reported the Mortgage Bankers Association. Gold prices plummeted by 2.9% to $2,669.40 per troy ounce, while silver saw a 4.5% decrease to $31.29 per ounce..