Stocks soared to a record highs Wednesday as former President Donald Trump was reelected to the White House.
Republicans also took control of the Senate, while control of the House of Representatives was still undecided.
The Dow Jones Industrial Average rose 3.5%, or 1,508 points to close at a record 43,729.93 and post its best day since 2022, while the S&P 500 gained 2.53% to end at 5,929.04 and the tech-heavy Nasdaq advanced 2.95% to finish the session at a record-breaking 18,983.46.
Jeffrey Roach, chief economist for LPL Financial, said that it was no surprise bond yields were rising "since the Fed seems committed to its rate cutting campaign despite solid economic growth and nagging services inflation."
"Markets are hedging bets that the Fed could make a policy mistake by reigniting inflationary pressures as consumers, especially the well-heeled millennials, support the economy," he said. "The significant rise in the futures market validates the view that a Trump administration will be generally good for U.S. businesses."
But like any regime shift, Roach added "there will be winners and losers, so investors should be discriminating in their portfolio allocations."
Updated at 1:35 PM EST
Early signs?
The Treasury sold $25 billion in new 30-year bonds early this afternoon, following the biggest one-day gain in yields since 2020, and saw a big decline in foreign investor participation that could suggest some concerns tied to the tax and spending plans of the coming Trump administration.
Investors placed bids worth around $66 billion, generating a demand ratio of 2.64, up from the 2.4 recorded in last months sale. So-called indirect bidders, however, comprised of mostly foreign central banks, took down 62.7% of the sale, down from the six-auction average of 68.1%
30Y auction wasn't too bad ahead of the Fed... $TLT
— Special Situations 🌐 Research Newsletter (Jay) (@SpecialSitsNews) November 6, 2024
The $25 billion 30-year Treasury new issue was awarded at 4.608%, the highest since May, versus 4.630% when-issued yield at the 1 p.m. New York time bidding deadline.
That came after a selloff lifted its yield by nearly 20bp…
Updated at 12:27 PM EST
Momentum rules
Stocks are holding onto their earlier gains into the afternoon session, despite another leg higher in Treasury yields, with the S&P 500 last marked 120 points, or 2.07% higher and the Nasdaq up 438 points, or 2.38%. The Dow was last seen 1,328 points or 3.14% to the upside.
"It's more than a relief rally, it is a vote of optimism about lower regulatory restrictions, reduced government spending, and a more optimistic consumer," said Louis Navellier of Navellier Calculated Investing. "It may be counterintuitive for P/Es to rise in the face of higher interest rates, but it's more likely for rates to pull back as inflation continues to fall and the Fed rate cuts proceed," he added.
The S&P 500 just crossed above 5,900 for the first time, its 11th 100-point milestone of the year. $SPXhttps://t.co/l5IYmkf6Ih pic.twitter.com/45UFU0HvOX
— Charlie Bilello (@charliebilello) November 6, 2024
Updated at 11:31 AM EST
Targeted view
Goldman Sachs reiterated its 12-month price target for the S&P 500, which sees the benchmark rising to around 6,300 points, thanks in part to an improving earnings story and a supportive Federal Reserve.
"We forecast EPS growth of 11% in 2025 and 7% in 2026, although those estimates may change as the new administration’s policy agenda comes into clarity," the bank said in a note published Wednesday. "The prospect of trade conflict poses downside risk to these estimates, while the potential for changing regulatory and corporate tax policy pose upside risks."
The bank also noted that post-election rallies usually drive markets 4% higher into the end of the year, a move that would take the S&P 500 to around 6,015 points.
Updated at 10:59 AM EST
Re-VOL-ver
The market's benchmark volatility gauge, the CBOE Group's VIX index, fell sharply in the wake of former President Trump's election victory as the decisive nature of the win, and the reduced chance of it being contested, added a further tailwind to U.S. stocks.
The VIX was last marked 21.6% lower in mid-morning trade at $16.07 each, the lowest since late September and a level that suggests traders are expecting daily swings of around 1%, or 59 points, for the S&P 500 over the next 30 days.
BREAKING: The Volatility index's, $VIX, put-to-call ratio has jumped to 2.3, one of the highest readings in over a decade.
— The Kobeissi Letter (@KobeissiLetter) November 6, 2024
Since 2020, there were only two times when the ratio was higher; the 2020 pandemic stock market bottom and the Q3 2020 pullback.
This means, traders are… pic.twitter.com/VwcjwimoKz
Updated at 9:46 AM EST
Records everywhere
The S&P 500 was marked 120 points, or 2.08% higher in the opening minutes of trading, having hit a record of 5,905.60 points just after the bell, with the Nasdaq surging 402 points, or 2.12%
The Dow was up 1,314 points, and a fresh record high of 43,570.09 points while the mid-cap Russell 2000 gain 98 points or 4.38%.
S&P 500 Opening Bell Heatmap (Nov. 06, 2024)$SPY +2.03🟩$QQQ +1.88%🟩$DJI +3.08%🟩$IWM +5.04%🟩 pic.twitter.com/MjboWmuUdu
— Wall St Engine (@wallstengine) November 6, 2024
Updated at 9:01 AM EST
Bond vigilantes?
Bond markets continue to react sharply to former President Trump's decisive victory, which is likely to include massive tax cuts that could swell the federal budget, as well as trade tariffs that could stoke inflation pressures.
Much will depend on the composition of the House for the former, but the latter is left largely up to the President's discretion and is already having an impact on Federal Reserve rate cut bets.
Benchmark 10-year Treasury note yields were last marked 15 basis points higher than yesterday's levels and changing hands at a July 1 peak of 4.451%. Longer-dated 30-year bonds, meanwhile, had their biggest yield gain in four years and were last marked at a late May high of 4.64%.
Related: Trump election victory could put Fed interest rate cuts at risk
Updated at 8:25 AM EST
Big beast
Nvidia (NVDA) shares, like most of the megacap tech stocks, is moving higher in early trading and looks set to cement its place as the world's most valuable company, just ahead of Apple (AAPL) in early Wednesday trading.
Nvidia was last marked 1.15% higher at $141.52 each, a move that implies a market cap of around $3.47 trillion, with Apple marked 0.47% higher at $224.49 each, with a market value of around $3.39 trillion.
The race is over. Congrats America $NVDA pic.twitter.com/aN6H6uKUzS
— Flowseidon (@kiantrades) November 6, 2024
Updated at 7:26 AM EST
Trump Trade in focus
So-called Trump Trade stocks, which are seen as immediate beneficiaries to both a decisive presidential victory and a Republican-dominated Congress, are powering early gains, with Trump Media & Technology (DJT) shares leading the way.
The parent of Truth Social, the former president's social-media network, was marked 38% higher, on around 22.5 million shares in premarket volume, and was expected to open at $46.90.
Tesla shares were also active, rising nearly 13% to the highest levels since July 2023, while bank stocks such as JP Morgan Chase (JPM) , Bank of America (BAC) and Wells Fargo (WFC) all gained between 6% and 8% in heavy premarket dealing.
Another interesting early mover is Albertsons (ACI) , which was last marked 3.2% higher at $19.13, likely on the back of bets that its FTC-challenged merger with Kroger (KR) may find a more favorable regulatory backdrop under a Trump administration.
Related: Tesla stock soars as markets reprice key 'Trump Trade' bet
Updated at 5:51 AM EST
Victory for Trump called
Nearly all the major U.S. media outlets have declared victory for Donald Trump, with the former president now projected to have won 276 Electoral College votes in a stunning return to the White House.
Republican lawmakers are also on pace to win back control of the Senate and look set to hold a narrow majority in the House of Representatives.
Donald Trump is elected 47th president of the United States https://t.co/u4GTJndc3v pic.twitter.com/mIYwP26hMK
— The Wall Street Journal (@WSJ) November 6, 2024
Updated at 4:49 AM EST
Global gains as returns suggest Trump win
Stock futures are powering higher as returns continue to suggest a decisive Trump victory, with the S&P 500 called 136 points higher and the Dow poised for a massive gain of around 1,130 points.
Global markets are also reacting to the surprise election results, with Europe's Stoxx 600 benchmark rising 1.7% in early Frankfurt trading and Britain's FTSE 100 rising 1.1% in London.
Japan's Nikkei 225, meanwhile, rose 2.61% to close at a three-week high of 39,480.67 points. China stocks, by contrast, were down across the board, with the CSI 300 falling 0.55 and Hong Kong's Hang Seng slumping 2.23%.
Judging from the price movements and the early analyst commentaries, the markets see the US elections as a big win for President Trump, a significant strengthening of Republicans in Congress, and a surge in a new economic movement.
— Mohamed A. El-Erian (@elerianm) November 6, 2024
One of the questions being asked is how worries…
Stock Market Today
Trump, 78, declared victory at around 2:30 am Eastern Time after the Associated Press called Pennsylvania in his favor, putting him just shy of the 270-seat Electoral College threshold that would sweep him into the White House. He is also on track to possibly win the popular vote.
Projections also suggest that Republican lawmakers would retake control of both the House of Representatives and the Senate, setting up a so-called red wave that would enable his economic agenda to move quickly to fruition when he assumes office in late January as the 47th president.
"America have given us an unprecedented and powerful mandate," Trump told his supporters. "This was the greatest political movement of all time."
Stock futures reacted to the seemingly decisive win, particularly given the nature of House and Senate races, while markets around the world braced for the impact of Trump's promised tariff and trade protection policies under a new administration.
Congratulations President-elect @realDonaldTrump on your historic election victory.
— Keir Starmer (@Keir_Starmer) November 6, 2024
I look forward to working with you in the years ahead. pic.twitter.com/QYHLd4k4EG
The S&P 500 looks set to open at a fresh all-time high, with futures contracts tied to the benchmark indicating an opening bell gain of around 112 points.
The Dow Jones Industrial Average, meanwhile, was last called more than 950 points higher, a move that would put it over the 43,000 point mark.
The tech-focused Nasdaq, meanwhile, was marked 332 points higher as traders bet that fewer regulatory hurdles would stand in the way of the megacap tech growth story.
Treasury bond yields, however, were also moving sharply higher, with benchmark 10-year note yields rising to 4.471% and 2-year paper trading at 4.241%.
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“Market reaction is large but orderly - we have to remember that markets have been putting on the Trump 2.0 trade directionally since early October," said John Hardy, chief macro strategist at Saxo Bank.
"So the coming hours and days will tell is the degree to which we have priced in a lot of what is to come if the scenario is fully realized."
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 1.55% higher at 105.023, the highest since early July.
Bitcoin prices, meanwhile, surged past the $75,000 mark for the first time on record, as investors bet that a Trump administration would bring favorable regulation for the cryptocurrency sector.
The world's biggest digital currency was last marked 5.1% higher at $72,922.94 each.
Related: Betting on interest rate cuts will be trickier in 2025
Currencies seen as being exposed to Trump's planned tariffs were also on the move, with the euro falling 1.4% to 1.0736 against the greenback and the Mexican peso falling to the lowest levels in more than two years at 20.635 against the dollar.
"European politicians will be waking up to face their fears this Wednesday morning," said ING's global head of markets, Chris Turner.
"As it now seems likely now that Trump will take the presidency with a strong popular mandate, his trade agenda of leveling the playing field will weigh heavily on the open economy of continental Europe."
Related: Veteran fund manager sees world of pain coming for stocks
