US benchmark equity indexes reached record highs on Wednesday as Treasury yields surged following Donald Trump's presidential election victory. The Dow Jones Industrial Average saw a significant increase of 3.6%, closing at 43,729.9, while the Nasdaq Composite rose by 3% to finish at 18,983.5. Meanwhile, the S&P 500 grew by 2.5%, reaching 5,929. In terms of sector performance, financials experienced the largest gains, soaring 6.2%, while real estate faced the largest decline of 2.6%. Trump, representing the Republican Party, triumphed over Kamala Harris, the Democratic candidate and vice president, in the election held on Tuesday.
Investors are now closely monitoring how his return to the White House may affect various economic factors, including the possibility of new tariffs, the impacts of immigration reforms on the labor market, and the benefits expected for major technology corporations. Wells Fargo Investment Institute commented, "US large-cap equities could benefit from a combination of deregulation and potentially additional tax cuts.
Smaller, domestic-oriented companies should find an advantage from tariffs on imports." In the bond market, the US 10-year yield surged by 14.9 basis points to reach 4.44%, while the two-year rate increased by 7.3 basis points to settle at 4.28%. Additionally, the Federal Reserve commenced its two-day monetary policy meeting on Wednesday.
Market analysts largely anticipate that policymakers will decide to reduce interest rates by 25 basis points in their upcoming Thursday announcement, based on data from the CME FedWatch tool. Stifel noted in a Wednesday report to clients, "Following an outsized (50-basis-point) cut in September, the Fed is widely expected to continue along a path to easier monetary policy albeit at a more tempered pace with a (25-basis-point) adjustment this week." In corporate news, Tesla jumped nearly 15%, making it the top performer on the Nasdaq and one of the best performers on the S&P 500, as the election results led to increased speculation that the electric vehicle manufacturer could benefit from Trump's victory.
Meanwhile, shares of banking giants Goldman Sachs and JPMorgan Chase saw significant increases of 13% and 12% respectively, marking them as the leading gainers on the Dow. Conversely, Super Micro Computer was the worst performer on both the S&P 500 and Nasdaq, tumbling 18%. Following the election results, the artificial intelligence server maker disclosed interim financial insights for its fiscal first quarter, addressing concerns raised by accounting firm Ernst & Young with a committee finding no signs of fraud or misconduct. In addition, International Flavors & Fragrances shares declined 12%, making it one of the steepest decliners on the S&P 500 after reporting third-quarter adjusted earnings that fell short of expected results. In commodities, West Texas Intermediate crude oil dipped 0.2% to $71.87 per barrel, amidst speculation that the incoming Trump administration could enforce stricter US oil sanctions against Iran.
Government data revealed an unexpected increase in commercial crude stockpiles. On the economic front, mortgage applications in the US dropped for the sixth consecutive week, reflecting a rise in rates for 30-year fixed mortgage types, as reported by the Mortgage Bankers Association. Gold prices fell by 2.9% to $2,670.40 per troy ounce, while silver experienced a decline of 4.5%, reaching $31.31 per ounce..