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Why Trump’s Victory Is Fueling a Market Frenzy

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Why Trump’s Victory Is Fueling a Market Frenzy

Investors have been comforted by a clear election result and are anticipating tax cuts and deregulation from a second Trump administration.

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Two people standing at a bank of computer screens. Baseball caps, some of which include the words “Make America Great Again,” hang on the wall above the screens.
Since Donald J. Trump’s election victory, stock prices for perceived corporate winners have snapped higher.Credit…Justin Lane/EPA, via Shutterstock

Talmon Joseph Smith

Nov. 12, 2024
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Donald J. Trump’s election victory reverberated through financial markets. And one week later, bets on the economy’s path and on corporate winners or losers — known as the “Trump trade” on Wall Street — are in full swing.

Stock prices for perceived winners have snapped higher: Bank valuations have soared, as investors anticipate more lenient regulations. The same is true for many large companies seeking to consolidate through mergers and acquisitions, which have frequently been blocked or discouraged under President Biden.

The share price of Tesla, run by Mr. Trump’s adviser and campaign benefactor Elon Musk, has surged by more than 40 percent since the election last week. Cryptocurrencies, which Mr. Trump has pledged to lend more support, popped as well, with Bitcoin hitting record highs.

Based on the president-elect’s promises of drastic immigration enforcement, which might increase demand for detention services, the shares of private prison operators also rose sharply.

Presumed losers slumped in price, including smaller green energy firms benefiting from Biden-era tax credits. A range of retailers and manufacturers reliant on imported goods have also suffered, because they may be negatively exposed to tariffs that Mr. Trump has floated.

The stock market overall, though, has ripped to new highs, surpassing the records it set earlier in the year.

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Source: https://www.nytimes.com