U.S. stock futures surged Wednesday morning following Donald Trump’s presidential victory and a Republican shift in Congress, with investors betting on major policy changes ahead and celebrating a swift resolution to election uncertainty.
Dow futures soared 1,200 points, or 2.9%, while S&P 500 futures gained 2.3% and Nasdaq futures climbed 1.8%. The rally would mark the Dow’s biggest single-day gain since November 2022, reflecting investors’ optimism about potential deregulation and pro-business policies under a Republican administration.
Trump-aligned companies led the pre-market rally, with Trump Media & Technology Group (DJT) surging 30%.
Major banks including JPMorgan, Bank of America, and Wells Fargo all jumped at least 6%, while small-cap Russell 2000 futures climbed on expectations of deregulation and business-friendly policies.
Cryptocurrency markets reacted strongly to the election results, with Bitcoin reaching a record high near $74,000 as Trump’s recent warming to digital currencies boosted sentiment.
The U.S. dollar index hit its highest level since July, rising 1.7% against the euro and British pound, as investors weighed Trump’s proposed tariff increases on major trading partners.
Bond markets reacted swiftly to Trump’s victory, with 10-year Treasury yields climbing above 4.4%. The surge in yields reflects investor concerns about Trump’s proposed tax cuts and spending plans potentially widening the fiscal deficit and reigniting inflation, potentially complicating the Federal Reserve’s rate-cutting plans ahead of Thursday’s policy meeting.
Global markets showed varying reactions to the U.S. election results. European stocks rose more modestly, with the Stoxx 600 up 1.3%, while Germany’s DAX and France’s CAC gained 0.7% and 0.8% respectively. In Asia, Japan’s Nikkei 225 jumped 2.6%, benefiting from what Neil Newman of Astris Advisory called “a strong Trump presidency and a weak Japanese government.” Chinese markets declined on tariff concerns, with Hong Kong’s Hang Seng falling 2.2%.
“We think equities reprice higher as we clear the uncertainty, volatility decreases and hedges unwind,” JPMorgan analysts wrote, though noting “uncertainty around policy execution would become more prominent in 2025.”
The rally builds on the S&P 500’s strong 2024 performance, already up more than 21% this year. However, historical data from CFRA Research shows markets have generally performed better under Democratic presidents, with the S&P 500 growing an average of 10% under Democrats compared to 6.7% under Republicans.