Donald Trump's election win shaped the stock market action early Wednesday, with a broad "Trump trade" pushing stocks, crypto, and other themes higher in a broad rally.
"The market initially is focused on all the potential positives of a Trump candidacy as far as lower regulations, lower taxes," Truist co-chief investment officer Keith Lerner told Yahoo Finance.
Trades that had frequently moved with Donald Trump's betting odds over the past month ripped higher as Trump clinched a victory over Kamala Harris in the presidential election.
Trump Media & Technology Group stock (DJT) soared over 30% early Wednesday before paring those gains to close up about 6%. The stock, in which Trump owns several billion dollars worth of shares, had surged throughout Tuesday night as a Trump win looked increasingly likely.
Other trades that had appeared to move in line with Trump's odds of winning also shot higher. Bitcoin (BTC-USD) surged to a fresh record high overnight as Trump emerged as the next president-elect. Investors had viewed Trump as the more pro-crypto candidate leading into the election.
The world's largest cryptocurrency surged above $76,000 per coin for the first time ever on Wednesday. Meltem Demirors, a general partner at Crucible Capital, told Yahoo Finance that the asset largely tracked Trump's betting odds 1-for-1 during the election cycle, a sign that investors had been dealing with a lot of "indecision" in the crypto market.
In July, Trump attended a bitcoin conference in Nashville to court voters.
His promises to the industry included appointing a crypto Presidential Advisory Council, firing SEC Chair Gary Gensler, and creating a "strategic national bitcoin stockpile."
The surge in prices for bitcoin and ethereum (ETH-USD), which was up more than 10% on Wednesday, came alongside a rise in crypto-related stocks.
MicroStrategy (MSTR), which holds a significant amount of bitcoin on its balance sheet, rose more than 13%. Crypto exchange Coinbase (COIN) also rose more than 31%, while Robinhood (HOOD), which offers cryptocurrency trading on its platform, popped almost 20%.
Investor support for the financial sector was also one of the standouts on Wednesday.
The SPDR Financials Sector ETF (XLF), which is comprised of some of the largest banks in the country, rose more than 6% for its best day in two years. Big banks including JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC), Citigroup (C), and Morgan Stanley (MS) were all up between 7% and 13%.
Meanwhile, companies with pending acquisitions caught bids, as seen by the more than 20% rise in Discover Financials (DFS) stock, which is currently in agreement to be acquired by Capital One (COF).
Broadly, New York Stock Exchange senior market strategist Michael Reinking told Yahoo Finance "all of the macro moves that you would widely expect" from a Trump win were at play.
The dollar (DX-Y.NYB) saw its biggest jump since 2016 as investors considered Trump's stance on higher tariffs. This coincided with a move higher in oil prices, with West Texas Intermediate (CL=F) futures hovering around $72 per barrel while Brent (BZ=F), the international benchmark, traded just above $75 per barrel. Additionally, US-listed Chinese stocks dropped amid fears tariffs on goods from China could weigh on e-commerce giants like Alibaba (BABA) and JD.com (JD).
Trump's policies are also viewed as inflationary, sparking a bond market sell-off. The 10-year Treasury yield (^TNX) rose about 13 basis points to 4.42%. A sharp rise in yields can often become a headwind for stocks.
But that wasn't the case on Wednesday. The Dow Jones Industrial Average (^DJI) jumped more than 3.6%, or more than 1,500 points, to lead the gains. The benchmark S&P 500 (^GSPC) moved up roughly 2.5%, while the tech-heavy Nasdaq Composite (^IXIC) rose about 2.9%.
IG North America CEO JJ Kinahan said that for now "things appear to be strong" but noted the rise in rates "bears monitoring."
"Higher rates could disrupt the broader economy," Kinahan wrote in a note on Wednesday.
