The stock market surged to record highs on Wednesday after Donald J. Trump won a decisive victory in the presidential election. The S&P 500 rose 2.5 percent, its biggest one-day gain in roughly two years, while the tech-heavy Nasdaq Composite index moved almost 3 percent higher.
The Dow lurched 3.6 percent higher. The Russell 2000, which tracks smaller companies considered to be more sensitive to the fate of the economy, jumped almost 5 percent, its biggest one-day rise in roughly two years as well. All four indexes notched record highs at the end of the trading day.
Analysts and investors noted that the reaction looked stronger than just relief, with traders preparing for more government spending, lighter regulation, bigger deficits, and accelerating growth under a Trump administration and at least partial Republican control of Congress. “What we are seeing is a visceral reaction to a surprising outcome given very tight polling,” said Kristina Hooper, chief global market strategist at Invesco. “Markets are reacting positively to a decisive victory.”
The U.S. dollar rose against the currencies of major trading partners — like the Japanese yen as well as the euro, the Mexican peso, and the Chinese renminbi.
The euro recorded its steepest daily fall against the dollar in more than four years. Major stock indexes around the world slumped.
Markets surge after surprise election win
On Friday, the S&P 500 crossed 6,000 for the first time in its near seven-decade history, a new milestone for the benchmark American stock index. Traders on the floor of the New York Stock Exchange witnessed the landmark moment as the S&P hit as high as 6,012.45 by mid-afternoon, closing at a record 5,995.54. The day’s 0.4% rally capped a remarkable 4.7% gain for the week—the sharpest weekly gain since November 2023.
This surge was largely attributed to the election of former President Donald Trump to a second term, which has fueled Wall Street optimism due to the prospects of corporate tax cuts and a less stringent regulatory climate under a Republican-led government. So far this year, the S&P 500 is up 25.7%, excluding dividends, marking it as the index’s fifth-best year since 2000. This impressive performance surpasses 2023’s robust 24.2% gain and places it within striking distance of some of the best years in recent history, such as 2013’s 29.6%, 2019’s 28.9%, 2021’s 26.9%, and 2003’s 26.4%.
Despite the market euphoria, financial experts recommend maintaining a steady approach to investing. Changes in administration and policy can create volatility, but long-term, diversified investing strategies generally prove resilient. It’s essential to avoid making abrupt decisions based on political developments alone.
As we look ahead, adjusting your investment strategy might be necessary, but it should be based on sound financial principles rather than short-term political changes. Slow and steady wins the race in the stock market, regardless of who sits in the Oval Office.
