The stock market, banks and bitcoin all soared on Wednesday after Donald Trump won the presidential election.
Investors rushed to make bets on what the 78-year-olds return to the White House would mean for the economy and the world.
Among the losers of his win look to be the renewable-energy industry and potentially those worried about higher inflation.
The S&P 500 rallied 2.5 percent for its best day in almost two years, while the Dow Jones Industrial Average soared 1,508 points, with the Nasdaq jumping 3 percent.
Boost for banks and credit card companies
Goldman Sachs and JPMorgan Chase both advanced over 10 percent, with many expecting Trump to dilute rules on how much capital banks have to hold in reserve.
President Biden has strived to limit credit-card late fees, which could also be scrapped under Trump who has spoke previously of a 10 percent cap on rates.
Banks were also helped along by Treasury yields which propelled to multi-month highs. A higher yield helps boost banks’ net interest income.
The biggest winner overall on the day was Discover Financial Services that jumped 20 percent.
Capital One Financial also climbed 15 percent, amid speculation of a pending merger between the two receiving federal clearance under Trump.
Big Tech and Crypto are big winners
Among the other winners that came out on top was big tech and crypto with tech leaders hoping for favorable policies under Trump.
Tesla CEO Elon Musk, a well known supporter of Trump who appeared at rallies alongside him, saw his company climb 15 percent.
Chip maker Nvidia meanwhile jumped up 4.1 percent just a day after they became the world’s most valuable company.
Amazon.com also rose 3.8 percent, with founder Jeff Bezos taking to X to congratulate the new president-elect.
He said: ‘Big congratulations to our 45th and now 47th President on an extraordinary political comeback and decisive victory. No nation has bigger opportunities.’
Despite gains across tech companies, Meta Platforms, the parent company of Facebook, slipped slightly. Trump has referred to Facebook as the ‘enemy of the people’.
In the world of cryptocurrency, assets soared under Trump who has frequently spoken of his willingness to embrace the industry. Bitcoin climbed 8 percent to $75,000.
Outside of large scale companies, the Russell 2000 index of small-cap companies climbed 5.8 percent.
The Wall Street Journal reported that such a climb was buoyed by optimism that corporate tax cuts and lighter regulation for small businesses are incoming.
Tariff-exposed companies bear the brunt
Those who have lost in the markets since Trump won the race included tariff-exposed companies that manufacture goods overseas.
Shares on Nike, Target, Best Buy and Williams-Sonoma traded lower. They are all seen as being highly exposed to tariffs.
Trump has repeatedly spoken of his plans to slap tariffs of as high as 60 percent on imported goods, especially on those coming from China.
He has yet to provide detail on just how he proposes that idea would work, it is unclear if he would also drop corporate income taxes and payroll taxes.
The former president had frequently denied that average Americans would bear the brunt of the cost of tariffs, arguing that companies overseas would pay them.
David Kelly, chief global strategist at J.P. Morgan Asset Management, told the Wall Street Journal on Wednesday: ‘We moved from a period of election uncertainty to significant policy uncertainty.
‘But Trump may be quite serious about tariffs. He likes tariffs and he’s looking at them as a way of funding tax cuts.’
Inflation worries climb
Investors also see Trump’s policies and tariff claims as being likely to add to future inflation, which can add costs to the US households’ bills.
Andrzej Skiba, head of BlueBay US Fixed Income at RBC Global Asset Management, said: ‘Trump keeps openly telling people that he will increase tariffs not just on China but with every trade partner.
‘We’re talking 10% tariffs across all global partners. This is a big deal because this could add 1% to inflation. If you add 1% to next year’s inflation numbers, we should say bye to rate cuts.’
A drop-off in immigration could also mean a crunch of available workers for employers, which could force companies to raise wages for workers faster and put more upward pressure on inflation.
Democratic presidential nominee Kamala Harris had been light on specifics when discussing her plans for the economy.
Her plan focused on lowering middle-class taxes, cutting food and grocery costs, and lowering prescription drug prices.
She also talked about creating an ‘opportunity economy’ for Americans to buy their first home or start a business.
Real estate woes amid higher mortgage rates
Across the whole of the S&P 500, real estate was the worst performing sector – losing 2.6 percent.
Developers rely heavily on debt financing and borrowing costs look like they will climb with rising bond yields.
The yield on the Treasury, which influences mortgage rates, climbed to 4.425 percent. Its highest since early July.
Demand for home builders is expected to fall as higher mortgage rates are rolled out.
Renewable energy stocks drop
A well known fan of fossil fuels, Trump has been actively encouraging production for oil and natural gas.
His win has subsequently sent solar energy stock lower, including a 10.1% fall for First Solar and 16.8% slide for Enphase Energy.
The only stock with a bigger loss in the S&P 500 was Super Micro Computer, which said its sales for the latest quarter could come in below its prior forecast. Its stock sank 18.1%.
The economy proved to be a deciding factor in his return to the White House, with his main promises laying in tariffs and tax cuts.
Economists and investors agree that tariffs will put upward pressure on inflation, while cutting tax could increase growth and increase deficits.
He did implement tariffs on China in his first term, but has proposed tariffs as high as 60 percent on China and between 10 to 20 percent elsewhere.
Morgan Stanley predict his plan would raise consumer prices in the US by 0.9 percent.
Analysts warned that more turbulence is likely to come as results of congressional results come in.
A clean sweep, giving Trump’s Republicans control of both the Senate and House of Representatives, would leave him with a free hand to enact all his plans.
