NEW YORK (AP) — The U.S. stock market, Elon Musk’s Teslabanks and bitcoin are all set to rise on Wednesday as investors bet on what Donald Trump’s return to the White House will mean for the economy and world. Among the losers the market sees: solar companies and possibly anyone else who is concerned higher inflation.
The S&P 500 rose 2.4% in afternoon trading and was on track to reach the top all-time high last month. The Dow Jones Industrial Average rose 1,438 points, or 3.4%, as of 2:30 p.m. Eastern time, while the Nasdaq composite was 2.8% higher.
The US stock market has historically tended to rise regardless of which side wins the White House, where Democrats have averaged bigger gains since 1945. But beneath the surface, Republican control could mean big shifts in the winners and losers, and investors are adding to their previously made expectations about what the higher rates, lower tax rates and lighter regulations what Trump favors will mean.
“Markets are struggling to figure out what will happen next, but for now the market is pricing in higher growth and higher inflation prospects,” said Peter Esho of Esho Capital.
Of course, how much change Trump will be able to effect will likely depend on whether his fellow Republicans win control of Congress. yet to be determined. That could leave room for a pullback in some of Wednesday’s big shock moves.
Nevertheless, after Trump’s dramatic victory, the market is divided between fairly clear winners and losers. Among them:
Bank stocks, UP
Bank stocks led the market higher, partly on hopes that a stronger economy would mean more customers would get loans and pay them back with interest. They also hoped for lighter regulation from a Republican White House, which could lead to more mergers and acquisitions where investment banks could earn fees. JPMorgan Chase rose 10.6%, and financial stocks in the S&P 500 had by far the biggest gains among the index’s 11 sectors.
Crypto, OP
Trump has promised to make the country ‘the crypto capital of the planet” and create a “strategic reserve” of bitcoin. The price of bitcoin hit an all-time high of over $75,000, according to Coindesk, and was recently up 7.7% to around $75,466. Companies in the crypto industry also jumped, including trading platform Coinbase’s 32.1% jump.
Tesla, OP
Musk has become a close ally of Trump and is egging on the former president. While Trump could ultimately hurt the electric car industry broadly by limiting government subsidies, analysts say Tesla could gain somewhat of an advantage by already being such a big player in the sector. Tesla rose 14.5%, while rival Rivian Automotive fell 8.4%.
Trump Media & Technology Group, UP
The company behind Trump’s Truth Social platform rose 5.9% after jumping almost 35% earlier in the day. It regularly trades more on Trump’s popularity than on profit prospects. The rise came even after it was filed unaudited financial documents regulators said Tuesday the company lost $19.2 million in the latest quarter and sales weakened from a year earlier.
Private Prison Operators, UP
A Trump-led Washington could push for stricter enforcement of the nation’s borders, which could mean more business for companies that work with U.S. Immigration and Customs Enforcement (ICE). GEO Group, which operates ICE processing centers, rose 37.9%.
Smaller company stocks, UP
Trump’s America-First policy could help companies that focus on customers in the United States, rather than large multinationals that could be hit by higher tariffs and protectionism. The Russell 2000 index of smaller stocks, seen as more domestically focused than the big stocks in the S&P 500, rose 5.6%. That was more than double the S&P 500’s gain.
Government bond prices, DOWN
Investors see that Trump’s policies could potentially lead to stronger economic growth, which will push down government bond prices and raise yields. Tax cuts under Trump could also further increase the US government’s budget deficit, increasing borrowing needs and driving interest rates up even further. The yield on the 10-year government bond rose to 4.44% from 4.29% late Tuesday, an important step for the bond market. It has increased significantly from August, when it was below 4%.
Inflation concerns, UP
Investors also see that Trump’s policies are likely to contribute to future inflation, especially tariffs, which could increase U.S. household bills.
“Trump continues to openly tell people that he will raise tariffs not just on China, but on all trading partners,” said Andrzej Skiba, head of BlueBay US Fixed Income at RBC Global Asset Management. “We are talking about 10% tariffs for all global partners. This is a big problem because it could increase inflation by 1%. If you add 1% to the inflation figures next year, we will have to say goodbye to interest rate cuts.”
A drop in immigration could also prompt companies to raise wages for workers more quickly, which could in turn put more upward pressure on inflation.
Expectations for rate cuts, muddled
Much of Wall Street’s record attempt this year was based on expectations upcoming interest rate cuts by the Federal Reservenow inflation appears to be back to the 2% target. A more flexible interest rate helps stimulate the economy, but can also give more fuel to inflation.
The Fed will announce its latest interest rate decision on Thursday, with a cut still expected, according to data from CME Group. But traders have already lowered their forecasts for how many cuts the Fed will implement by the middle of next year.
Foreign currency, DOWN against the dollar
Trump has vowed to sharply raise tariffs on imports from China, Mexico and other countries, raising concerns about trade wars and disruptions to the global economy. A measure of the value of the U.S. dollar against several major currencies rose 1.6%, meaning those other currencies fell.
The euro fell 1.7%, the South Korean won fell 1.4% and the Mexican peso fell slightly further against the dollar.
Renewable energy stocks, DOWN
Trump is a fan of fossil fuels and encourages the production of oil and natural gas. His victory sent solar stocks sharply lower, including an 8.7% decline for First Solar and a 15.1% decline for Enphase Energy.
The only stock with a bigger loss in the S&P 500 was Super Micro Computer, which said its latest quarter revenue could come in below its previous forecast. The stock fell 21.5%.
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AP writers Zimo Zhong, Elaine Kurtenbah, Kirstin Grieshaber and Kelvin C
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