Stock Market Today: Dow Scores Historic Rally After Trump Election Win, Focus Turns to Federal Reserve
Stock Market Today: U.S. stock futures traded near flat on Wednesday night, following a historic post-election rally that saw the Dow Jones Industrial Average soar by over 1,500 points after Donald Trump’s decisive presidential election victory. The attention now shifts to the Federal Reserve’s upcoming interest rate decision, which could influence the market’s momentum.
The Dow Jones Industrial Average futures were down slightly, by just 12 points, or less than 0.1%, while the S&P 500 and Nasdaq 100 futures traded marginally below flat. Investors celebrated Trump’s White House win on Wednesday with the Dow jumping a record-breaking 3.6%, the largest post-election surge in over 128 years. This put the blue-chip index at a new all-time high of 43,729.93. Likewise, the S&P 500 and Nasdaq Composite closed at record levels, with the small-cap Russell 2000 index soaring by 5.7% to reach its own all-time high.
The stock market’s rally on Wednesday underscores the market’s relief at a clear election outcome. Many investors viewed the results as positive for U.S. equities, reflecting optimism around potential tax cuts, domestic industry growth, and a friendly regulatory environment under Trump’s policies. “The results are in, and the financial markets can breathe a little easier without concern over a prolonged election process,” said Scott Helfstein, head of investment strategy at Global X ETFs. However, he cautioned that investors should brace for future volatility, noting that while the election results have provided short-term relief, the market’s underlying fundamentals will dictate long-term trends.
Goldman Sachs Group Inc. led the Dow’s gains on Wednesday, skyrocketing by more than 13% in afternoon trading, outperforming the broader market indices. Bank stocks, bitcoin, and the U.S. dollar all gained amid expectations that Trump’s presidency could bring favorable economic policies for financial institutions and traditional industries. In contrast, solar stocks and green-energy names struggled, with Enphase Energy and First Solar dropping significantly, as investors anticipated potential policy shifts that could hinder growth in the renewable sector.
After Wednesday’s election-fueled surge, attention has shifted to the Federal Reserve’s policy meeting scheduled for Thursday afternoon. The Fed is expected to announce its second consecutive interest rate cut, which would mark a 25-basis-point reduction, according to the CME Group’s FedWatch Tool. Traders are pricing in a 100% likelihood of this cut, as the central bank aims to address economic uncertainties and potentially ease borrowing costs.
Although a rate cut seems imminent, expectations have moderated for future cuts. The probability of a December cut has fallen slightly, and market participants are less certain of a January cut. After Wednesday’s election results, the FedWatch tool now shows a 54% chance that the Fed will pause rate cuts in January, a significant shift from previous market forecasts.
Treasury yields spiked in response to Trump’s election win, with the 30-year rate jumping by 15.3 basis points. The surge in yields has tempered expectations for aggressive Fed rate cuts over the winter. Rising Treasury yields reflect market adjustments to the anticipated fiscal policies, which could lead to inflation pressures. The strong dollar also put pressure on commodity prices, particularly oil and gold, which saw declines amid the post-election rally.
Gold prices suffered their largest one-day dollar loss since June 2021, dropping over $73 per ounce. Similarly, oil prices fell, with West Texas Intermediate crude closing at $71.69 per barrel. Dave Aspell, co-chief information officer at Mount Lucas Management, noted that the rising dollar contributed to these declines, as a strong dollar can make dollar-denominated assets more expensive for international buyers.
As Wall Street digests the election results, investors are already questioning how long the rally can last. Janus Henderson Investors’ Marc Pinto and Lucas Klein observed that while short-term gains are notable, the real test for U.S. stocks will depend on how policy decisions impact corporate earnings. The growth outlook, particularly for small-cap and value stocks, remains strong, as indicated by the Russell 2000 Value Index, which outperformed its growth counterpart in Wednesday’s rally.
While “Trump trades” such as banking stocks and bitcoin experienced substantial gains, the sustainability of these trends will hinge on economic fundamentals and the Fed’s approach to managing interest rates. “Markets hate uncertainty, and now that the election is officially over, stocks are soaring today,” said Ryan Detrick, chief market strategist at Carson Group. He added that while optimism is high, inflation and growth concerns remain.
As of Wednesday, the Dow Jones sits at a record level, with major indices across the stock market marking significant gains in the wake of the election. However, as the Fed meets to make a crucial rate decision, the market could see further adjustments. The Fed’s guidance on Thursday will offer insights into the future path of interest rates and their potential impact on the economy.
With rising yields, a strong dollar, and continued speculation over domestic policy changes, investors will be closely watching economic data in the coming weeks, particularly around inflation and employment, to gauge how sustainable this rally may be.