After Donald Trump’s unexpected victory in the presidential race and the Republicans’ successful Senate sweep, U.S. stock indexes soared on Wednesday, signaling investor optimism. The Dow Jones Industrial Average (DJIA) surged to its biggest gain in two years, as investors were willing to bet that a Trump presidency, along with Republican congressional control, would lead to economic growth through tax cuts and deregulation.
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Let’s look at who could be the winners and losers of Trump being in the White House.
The Winners From the Trump Trade…
- Financial stocks jumped sharply on Wednesday, with major banks, including Goldman Sachs (GS), JPMorgan Chase (JPM), and Wells Fargo (WFC), each surging by over 10%. The surge in banking stocks could be due to investors anticipating that the Trump administration will further ease regulations, reduce capital requirements, and possibly roll back Biden-era limits on credit card late fees. Furthermore, Discover Financial Services (DFS) surged by more than 15% as hopes grew for regulatory approval of Capital One Financial’s (COF) potential $35 billion takeover of the company. This acquisition is this year’s biggest deal.
- Tech stocks were the other big winners, with Tesla (TSLA) shares leaping 15% and Nvidia (NVDA) up by 4.1%. Notably, Alphabet (GOOGL) and Amazon (AMZN) gained as well, with rising expectations of antitrust pressures easing under Trump.
- Cryptocurrencies soared as well, with Bitcoin (BTC-USD) climbing nearly 8% to approach record highs. Coinbase Global (COIN) skyrocketed by 31%, fueled by expectations that a Trump administration might foster a more crypto-friendly environment.
- Additionally, small-cap stocks gained too, reflecting optimism that tax cuts and deregulation could benefit smaller businesses.
…and the Losers
However, stocks in certain sectors traded lower amid fears that companies highly exposed to tariffs could be significantly affected. According to a Wall Street Journal report citing David Kelly, chief global strategist at J.P. Morgan Asset Management, “But Trump may be quite serious about tariffs. He likes tariffs and sees them as a way to fund tax cuts.”
- As a result, shares of Nike (NKE), Target (TGT), and Best Buy (BBY) declined.
- Stocks in the real estate sector, like Lennar (LEN) and KB Home (KBH), also fell as rising bond yields hinted at higher borrowing costs, dampening the outlook for developers and homebuilders amid potential mortgage rate hikes.
Conclusion
While these are still early days, it remains to be seen how investors’ excitement and anticipation about Trump’s policies play out over the long term.
