U.S. Stocks Surge To Record Highs Following Trump Victory

(RTTNews) - Following the rally seen in the previous session, stocks have shown an even stronger move to the upside during trading on Wednesday. With the surge, the major averages have all reached new record intraday highs.

The major averages have moved roughly sideways after an early spike, holding on to substantial gains. The Dow is up 1,328.03 points or 3.2 percent at 43,549.91, the Nasdaq is up 413.56 points or 2.2 percent at 18,852.73 and the S&P 500 is up 110.27 points or 1.9 percent at 5,893.03.

The extended rally on Wall Street comes as former President Donald Trump has been declared the winner in the presidential election versus Vice President Kamala Harris.

Claiming victory in several key swing states, Trump is projected to win far more than the 270 Electoral College votes needed to secure his return to the White House.

Trump is seen by the markets as better for corporations and is likely to renew the tax cut package enacted during his first term, which was due to expire at the end of 2025.

A Trump administration is also expected to scale back government regulations and be less hostile to mergers and acquisitions.

However, Trump has also called for increased tariffs on China and other countries, which could lead to renewed inflation concerns.

"A side effect of tariffs and higher prices would be interest rates staying higher for longer, which would be unhelpful for the housing market which, in turn, will act as a drag on home-related categories," said Neil Saunders, Managing Director of GlobalData.

He added, "While Trump promised lower interest rates, and wants more control over the setting of rates, it is not in his immediate gift to enact this kind of change."

Republicans are also projected to retake control of the Senate for the first time in four years, although control of the House remains up for grabs.

With the elections now largely in the rearview mirror, traders will turn their attention to the Federal Reserve, which is due to announce its latest monetary policy decision on Thursday.

The Fed is widely expected to lower interest rates by 25 basis points, but the accompanying statement could the impact the outlook for future rate cuts.

Sector News

Financial stocks have skyrocketed amid optimism about reduced regulation under Trump, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index soaring by 8.8 percent and 6.5 percent, respectively.

Optimism about fewer regulations is also contributing to substantial strength among oil service stocks, as reflected by the 5.5 percent spike by the Philadelphia Oil Service Index.

Airline stocks have also shown a significant move to the upside, driving the NYSE Arca Airline Index up by 4.3 percent to its highest intraday level in over a year.

Software, networking and telecom stocks are also seeing considerable strength on the day, while gold, commercial real estate and housing stocks have moved sharply lower.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index spiked by 2.6 percent, while Hong Kong's Hang Seng Index plunged by 2.2 percent.

Meanwhile, the major European markets have come under pressure over the course of the session. While the German DAX Index has slumped by 1.1 percent, the French CAC 40 Index is down by 0.6 percent and the U.K.'s FTSE 100 Index is down by 0.1 percent.

In the bond market, treasuries have pulled back sharply in reaction to Trump's victory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 16.5 basis points at 4.453 percent.