Stock Markets Rally After Trump’s Election Win, But Questions Linger
The stock market surged following the announcement of Donald Trump’s victory in the 2024 U.S. presidential election. Investors initially welcomed the result, driving major indices to record highs by the end of election week. The Dow Jones Industrial Average gained 4.6%, the S&P 500 rose 4.7%, and the Nasdaq Composite jumped 5.7%.
However, the rally proved short-lived. By the following week, equities retraced a portion of their gains as markets began to evaluate whether the postelection optimism was sustainable and whether Trump’s policies would indeed be as market-friendly as anticipated.
Election Anxiety and Market Dynamics
Throughout 2024, investors grappled with election-related uncertainty. The tightly contested race between Trump and incumbent Kamala Harris sparked volatility and a mix of speculative trades. Polls showing a neck-and-neck battle kept anxiety high, leading to a 1% drop in the S&P 500 in October—a month historically marked by declines during election years.
“This October mirrored past election-year trends. Investors were apprehensive, awaiting clarity,” said Steven Wieting, Chief Economist and Investment Strategist at Citi Wealth.
Market Reactions to Trump’s Policies
Trump’s victory unleashed a wave of sector-specific optimism. Cryptocurrencies soared, with Bitcoin reaching all-time highs above $90,000 and Dogecoin more than doubling. Trump’s pro-crypto stance played a key role in these movements.
The U.S. dollar also rallied, hitting a one-year high as investors anticipated Trump’s “America-first” trade policies, including potential import tariffs. Financial and technology sectors surged on hopes of deregulation and extended corporate tax cuts—a hallmark of Trump’s previous presidency.
“I believe the financial sector stands to gain the most under Trump’s policies,” noted Marco Pirondini, CIO at Amundi. “Whether all these policies materialize remains to be seen, but even partial implementation could be significant.”
Lingering Uncertainty
Despite the initial rally, markets face new uncertainties. Key questions revolve around Trump’s stance on tariffs, immigration, and geopolitical challenges, including conflicts in Ukraine and the Middle East.
“We’re processing a flood of developments,” said Wieting. He added that markets are particularly sensitive to Trump’s appointments and early policy actions, especially regarding tariffs, which could drive inflation and market volatility.
Geopolitical tensions and fiscal challenges, such as the ballooning U.S. debt and budget deficit, also weigh heavily. Trump’s proposal to address deficit spending by creating a “Department of Government Efficiency,” led by Elon Musk and Vivek Ramaswamy, adds another layer of intrigue.
“The deficit and debt situation are critical issues for Wall Street,” said Robert Conzo, CEO of The Wealth Alliance.
Investors Look Ahead
As markets adjust to a Trump presidency, key upcoming events will influence sentiment. Quarterly earnings from major companies like Walmart, Nvidia, and Target, as well as Federal Reserve commentary on inflation and interest rates, are in focus.
While Trump’s win has energized parts of the market, the path forward remains unclear. “Markets hate uncertainty, and despite Trump’s victory, it’s far from over,” Conzo remarked.
For now, the postelection rally may be just a prelude to a more complex market journey ahead.
