After Donald Trump won the election, U.S. stocks and bitcoin went through all-time highs, the dollar went through the roof, and Treasury bonds sold off strongly. There was no way to get around the Trump trade on Wednesday.
That is, assets that had gone up in value because people thought Trump would win kept going up, while assets that had gone down in value sped up their decline. This showed that a victory hadn’t been fully priced into the market. It also showed happiness that the election had given a clear result.
“Uncertainty is bad for the markets, and now that the election is over, stocks are going through the roof.” Part of it is hope for tax cuts, a still-dovish Fed, and a possibly better economy. But the economy has been pretty strong all year, so this isn’t really anything new, said Ryan Detrick, chief market analyst at Carson Group, in an email. “We think it’s going to be back to your normal bull market.”
For buyers, the question is what will happen after the election is over. Take a look at how different investments did the day after the election.
Stocks: Just like after Trump’s win in 2016, stocks went through the roof. Bloomberg reports that the Dow Jones Industrial Average DJIA 3.57% went up more than 1,500 points, or 3.6%. This is the largest percentage gain since 1896 after Election Day. More than any other day after an election, the S&P 500 SPX 2.53% went up 2.5%, and the Nasdaq Composite COMP 2.95% went up 3%. Each of the three indexes finished at records.
The Senate was taken over by Republicans, but it wasn’t clear if they would also keep control of the House. A Trump victory, particularly if accompanied by a Republican sweep of Congress, was viewed in the run-up to the election as the most bullish scenario for U.S. stocks — with Trump calling for a further cut in the tax rate on corporate profits, after seeing it lowered to 21% from 35% in his first term, as well as personal tax cuts.
But experts say there might be more to it than meets the eye.
“The chances that personal tax cuts will be extended under a Republican sweep are only slightly good for the stock markets.” Corporate tax cuts are much more important. More has been promised in this area, but the details aren’t clear. For example, companies must keep their factories in the U.S., according to Yung-Yu Ma, chief investment officer at BMO Wealth Management, in a note.
