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Stock market today: the Dow Jones jumps 1,500 points following the election results

Umito November 7, 2024

They say markets hate uncertainty. This was certainly the case when stocks experienced a torrid rally following the results of the US presidential election. The so-called “Trump trade” was in full force, with some names benefiting more than others.

Risk appetite returned with greedy abandon on Wednesday, as tech investors Nasdaq Composite added 3% to 18,983 and the small cap Russell 2000 jumped almost 6%. The blue chip Dow Jones Industrial Average rose 3.6%, or 1,508 points to 43,729, while overall S&P500 rose 2.5% to 5,929.

Financial values were the big winners of the day at the sectoral level, followed by energy And industrial. Of the 11 S&P 500 sectors, only real estate, consumer staples and utilities finished in the red.

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Excluding equities, 10-year reference Treasury notes were sold off, increasing borrowing costs at the longer end of the yield curve. Gold And oil declined.

THE CBOE Volatility Index (VIX) – also known as the investor fear gauge – fell by about a fifth.

“Election results send stocks to the moon as investors celebrate Republican Party control of the White House and Senate,” writes José Torres, senior economist at Interactive Brokers. “A boost has likely arrived in Washington, with market participants excited about a lighter regulatory regime, lower tax rates, a business-friendly environment and “Made in America” policies. will drive sales and profitability.”

Focus on actions

Financial stocks were the biggest winners on Wednesday. Goldman Sachs (GS) was the best performer for the Dow Jones, gaining 13.1%. JPMorgan Chase (JPM) increased by 11.6%, while American Express (AXP) – one of Warren Buffett’s main actions – was up 7%.

Meanwhile, the S&P 500 was dominated by financial names such as Discover financial services (DFS+20.1%) and Financial Synchrony (SYF+18.8%). American steel producer Nucor (NAKED+16%) – one of best stocks for reliable dividend growth – also topped the S&P 500 charts.

Apart from the main equity indices, Trump Media and Technology Group (DJT+5.8%) benefited from a more modest increase during the session.

Meanwhile, the Nasdaq-100 – an index of the Nasdaq Composite’s largest non-financial companies – saw strong performance from industrials – but one sector name in particular stood out.

Tesla stock soars

Tesla (TSLA) stock rose 14.8% on Wednesday for obvious reasons. “TSLA is significantly higher due to Elon Musk’s proximity to the president-elect,” writes Steve Sosnick, chief strategist at Interactive Brokers.

The electric vehicle (EV) maker earned nearly $120 billion in market capitalizationor more than the total market value of Nike (NKE), a purchase price Dow Jones Stock. Although some of Trump’s proposed trade policies could pose a hurdle for the entire industry, Tesla stands to benefit, bulls say.

“We believe that a Trump presidency would be negative overall for the electric vehicle industry, as it is likely that Tax rebates/incentives for electric vehicles get shot,” writes Wedbush Securities analyst Daniel Ives, who rates the stock Outperform (Buy). “However, for Tesla, we view this as a potential positive, with some caveats. Tesla has unparalleled scale and reach in the electric vehicle industry and this dynamic could give Musk and Tesla a clear competitive advantage in a subsidy environment not linked to electric vehicles.”

At any rate, if Tesla stock is a buy at current levels is a topic of debate within the broader community of industry analysts.

Upcoming Fed meeting

Markets were so busy digesting the election result that they were unable to generate the usual anxiety that precedes Federal Open Market Committee (FOMC) meetings. Indeed, the next Fed meeting will conclude tomorrow with an afternoon policy announcement and press conference with Fed Chairman Jerome Powell.

Market participants are confident that the Fed will make another quarter-point cut in the near term federal funds rate. However, as always, the real action will take place at Powell’s post-statement press conference.

As of November 6, futures traders assigned a 98% probability that the FOMC would cut rates by 25 basis points (bps), or 0.25%, according to the CME Group. FedWatch tool.