US equity indexes achieved new intraday record highs, government bond yields surged, and the dollar strengthened after Republican presidential nominee Donald Trump triumphed over his Democratic opponent Kamala Harris in Tuesday's vote. The Dow Jones Industrial Average surged 3.3% to 43,617.9, while the S&P 500 climbed 2.2% to 5,911.4 and the Nasdaq Composite increased by 2.5% to 18,901.1.
Financials, energy, and industrials emerged as the top gainers, whereas real estate, utilities, and consumer staples were the only sectors to decline. This marks Trump's second presidency in non-consecutive terms, following in the footsteps of Grover Cleveland's re-election in 1892. The Republican Party appears to be moving closer to a clean sweep of Congress after successfully reclaiming the Senate. "Markets seemed to anticipate a continuation of Trump’s deregulation policies from 2016-2020, in addition to potential tax cuts," stated Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute.
"US large-cap equities might benefit from the combination of deregulation and additional tax cuts on the horizon. Furthermore, smaller, domestically-focused companies could gain an advantage from import tariffs." The US dollar strengthened against core trading partners following the electoral results, illustrated by a 1.6% surge in the US Dollar index, now at 105.12.
This movement precedes an upcoming policy announcement from the Federal Reserve's rate-setting panel, the Federal Open Market Committee, scheduled for Thursday. CME's FedWatch tool indicates a striking 99% probability of a 25 basis point interest-rate cut being priced in for Thursday's FOMC meeting announcement, positioning the target range at 4.5% to 4.75%.
The marginal remaining likelihood suggests the Fed may pause its easing cycle, which initiated in September with a 50 basis point reduction. Most US Treasury yields saw an uptick, with the 10-year yield rising 14.9 basis points to 4.44% and the two-year rate climbing 7.1 basis points to 4.27%. In economic updates, mortgage applications decreased by 10.8% in the week ending November 1, driven down by a continued rise in mortgage rates to their highest level since July, as reported by the Mortgage Bankers Association Wednesday.
This drop follows a slight 0.1% decline in overall activity during the week ending October 25. In corporate news, Super Micro Computer ($SMCI) experienced a significant share plunge of 23.1% intraday, making it the worst performer on both the S&P 500 and the Nasdaq due to fiscal Q2 guidance falling short of analysts' projections.
The company also remains behind schedule on its form 10-K filing for the fiscal year ending June 30. Wedbush commented that Trump’s presidency could favor Big Tech and Tesla ($TSLA) by promoting significant artificial intelligence initiatives, potentially reducing regulatory barriers. This could provide Tesla with a competitive advantage should the US government cut electric vehicle subsidies and increase tariffs on China.
Tesla’s shares surged 14.2% intraday, leading the Nasdaq. West Texas Intermediate crude oil saw a modest rise of 0.1% to $72.05 per barrel. Gold fell sharply by 2.8% to $2,671.80 per ounce, while silver saw a significant drop of 4.7% down to $31.24 per ounce..