Treasury yields surged Wednesday, as Wall Street reacted to Donald Trump's victory in the U.S. presidential election. The 10-year Treasury yield jumped to its highest level since early July. Meanwhile, the Federal Reserve's two-day meeting kicked off today, with an interest-rate decision Thursday afternoon.
The benchmark yield surged 16 basis points to 4.44% in afternoon trading, its largest one-day gain since April 10, when it jumped 19 basis points. Wednesday's move extends an advance in the yield that began Sept. 17 at 3.60%.
The Dow Jones Industrial Average surged to new highs, along with banking giants Goldman Sachs and JPMorgan Chase. Bank and other financials were broadly higher.
Donald Trump Election Victory
The expected GOP sweep, with the Republicans also likely to maintain control of the House, won't keep the Fed from reducing its benchmark rate by a quarter-point Thursday. There is a 99% chance of 25 basis point cut, per the CME's FedWatch Tool. The cut would take the benchmark rate to 4.5% to 4.75%.
However, odds of further rate cuts in December and beyond are sliding following Trump's election victory.
Markets now see 59% odds that the Fed's key rate will fall as low as 3.75% to 4% by the end of next year. Assuming quarter-point cuts Thursday and on Dec. 18, that implies just 50 basis points worth of cuts in 2025 — instead of a full percentage point in cuts penciled into Fed projections on Sept. 18.
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Dow Jones Stocks: Goldman, JPMorgan
The jump in Treasury yields helped spark big gains among financial stocks.
Goldman stock surged nearly 13% in heavy volume, moving out of buy range beyond a 517.26 buy point in a consolidation.
Meanwhile, JPMorgan stock leaped 11%, extended past a 225.48 cup-base entry, according to IBD MarketSurge chart analysis.
Regional Banks Jump
Meanwhile, regional banking stocks also surged on the stock market today, making them among the top performers Wednesday.
Zions Bancorporation staged a breakaway gap above a 53.32 entry in a consolidation. Because shares opened well above the 53.32 buy point, a more appropriate entry is the first five-minute high, or 57.44.
Shares were also extended above that buy trigger in afternoon action Wednesday. The relative strength line also hit a new high, along with the stock.
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