Stocks and Bitcoin rise after Trump win while inflation fears rise

STAN CHOW, Associated Press

NEW YORK (AP) — U.S. stock market, Elon Musk Teslabanks and bitcoin All rose sharply on Wednesday as investors bet that Return of Donald Trump to the White House will mean for the economy and world. Among the losers the market sees: the renewable energy industry and perhaps anyone concerned higher inflation.

The S&P 500 rose 2.5% on its best day in nearly two years. The Dow Jones Industrial Average rose 1,508 points, or 3.6%, and the Nasdaq jumped 3%. All three indices topped the records they set in recent weeks.

The US stock market has historically trended upward no matter which side wins But Republican control could mean big shifts in winning and losing industries beneath the surface, and investors are adding to earlier bets that higher tariffs, lower tax rates and easier regulation whatever Trump approves will mean.

“Markets are trying to figure out what’s going to happen next, but for now the market is forecasting higher growth and higher inflation,” said Peter Esho of Esho Capital.

Of course, how much Trump changes during his second term will likely depend on whether his fellow Republicans gain control of Congress, and that still to be determined. That could leave room for some sharp moves on Wednesday.

However, after Trump’s dramatic victory, the market is split between fairly clear winners and losers. Among them:

Banking shares, UP

Bank stocks led the market higher, partly on hopes that a stronger economy will mean more customers will take out loans and pay them back with interest. They were also united by the hope of looser regulation from a Republican White House. JPMorgan Chase shares soared 11.5%, and financial stocks posted the biggest gains among the 11 sectors that make up the S&P 500. Capital One Financial rose 15% and Discover Financial jumped 20.2%, leading the of the biggest market gains on speculation that are expected in the near future. under Trump, the merger will be easier to obtain federal approval.

Crypto, UP

Trump promised to make the country ” crypto capital planet” and create a “strategic reserve” of bitcoins. The price of Bitcoin hit an all-time high above $76,480 and was recently just below $76,100, according to CoinDesk. Companies in the crypto industry also jumped, including a 31.1% rise in trading platform Coinbase.

Tesla, UP

Musk has become a close ally of Trump, encouraging the former president to run. While Trump could end up crippling the electric vehicle industry by limiting government subsidies, analysts say Tesla could gain some advantage by already being such a big player in the industry. Tesla shares rose 14.8%, while rival Rivian Automotive shares fell 8.3%.

Trump Media & Technology Group, U.P.

the company behind Trump’s Truth Social The platform rose 5.9% after jumping nearly 35% earlier in the day. He regularly trades more on Trump’s popularity than on his prospects for profit. His growth occurred even after he filed unaudited financial documents Regulators said Tuesday that the company lost $19.2 million in its most recent quarter and that its sales were down from a year earlier.

Operators of private prisons, UP

Washington under Trump may push for tighter enforcement of the country’s borders, which could mean more business for companies that do business with U.S. Immigration and Customs Enforcement (ICE). Shares of GEO Group, which owns ICE processing centers, rose 42.1%.

Shares of small companies, UP

Trump’s “America First” policies could help companies focused on customers inside the United States rather than large multinational corporations that could be hurt by higher tariffs and protectionism. The Russell 2000 index of smaller-cap stocks, considered more domestically oriented than the larger S&P 500 stocks, jumped 5.8%. This was more than double the gain of the S&P 500 index.

Treasury Bond Prices DOWN

Investors see Trump’s policies potentially leading to stronger economic growth, which will help push down Treasury prices and boost yields. Trump’s tax cuts could also lead to a further increase in the US government’s deficit, increasing its borrowing needs and pushing yields higher. The yield on the 10-year Treasury note jumped to 4.43% from 4.29% late Tuesday, a major move for the bond market. This is significantly higher than in August, when it was below 4%.

Inflation fears, UP

Investors also believe Trump’s policies are likely to increase future inflation, especially tariffs, which could add costs to American households.

“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 deal because it could add 1% to inflation. If you add 1% to the inflation numbers next year, we should say goodbye to rate cuts.”

Reduced immigration could also mean labor shortages for employers, which could force companies to raise workers’ wages faster and put more pressure on inflation.

Expectations for interest rate cuts have been muddled