Donald Trump’s election victory sent shockwaves through the financial markets — and they’re still soaring. Stocks have soared to record highs, with the Dow Jones Industrial Average breaking 44,000 for the first time. Investors are betting on faster economic growth and larger government deficits under Trump’s proposed policies.
December has never been lower in an election year when the S&P 500 was up 10% or more at the midpoint.
Heard @fundstrat point this out this morning on @SquawkCNBC and I had to dig in. Good stuff, Tom. pic.twitter.com/AcxD67ceaW
— Ryan Detrick, CMT (@RyanDetrick) December 2, 2024
However, the bond market is showing signs of concern. Treasury rates have spiked, driven by optimism about the economy and the election outcome. Investors worry that Trump’s tax cuts and massive tariffs could stoke inflation.
Stocks have been higher 9 of the past 10 Decembers in an election year. pic.twitter.com/Ey8davLhd9
— Ryan Detrick, CMT (@RyanDetrick) December 2, 2024
Higher rates could make borrowing more expensive for companies and individuals. Despite these concerns, stock market investors seem unbothered for now. They are thrilled by the prospect of a more pro-business administration promoting tax cuts and deregulation.
Stocks To Watch | š Ready, set, trade! Keep an eye on these stocks as they set the market abuzz #StockMarket pic.twitter.com/j0nEYsrY0Y
— ET NOW (@ETNOWlive) December 3, 2024
Ed Yardeni, president of Yardeni Research, wrote, “Animal spirits are back.”
Stock market: Rs 2.3 lakh crore m-cap gain for top 10 companies! LIC leads the rally – Full listhttps://t.co/GLWBhBainb
— ET NOW (@ETNOWlive) December 1, 2024
Some stocks have outperformed even Tesla since the election.
Trump’s win fuels market surge
Private prison companies CoreCivic and Geo Group, which are Immigration and Customs Enforcement contractors, have seen their shares surge over 75%.
Cryptocurrency-related stocks have also enjoyed significant gains as Bitcoin rocketed to a record high above $86,000. Trump’s appointment of Tom Homan as his “border czar” has further boosted private prison stocks. Homan advocates for a “humane” but “necessary mass deportation operation.” Geo Group chairman George Zoley expects the government to fund 70,000 to 100,000 beds in ICE detention centers, roughly double the current number.
Bitcoin passed $88,000 for the first time on Monday as the post-election rally continued. Prominent crypto executives, including the Winklevoss twins, donated large sums to support Trump. Super PACs also raised over $100 million to elect pro-crypto congressional candidates.
Some investors caution that the markets may be getting ahead of themselves. Trump has releasedĀ a little concrete detail about his plans once he isĀ in office. Mark Hackett of Nationwide warned, “Investors should be careful that the hype doesn’t override fundamentals and introduce unnecessary risk.”
The situation will require careful monitoring as higher Treasury rates continue to pose potential challenges to economic stability.
For now, though, the stock market is loving Trump’s return to the White House.
