Donald Trump is back in the White House, and Wall Street’s celebrating like it’s 1999. Markets shot up across the board on Wednesday as investors placed big bets on Trump’s promises of corporate tax cuts, tariffs they actually like, and less regulation.
Basically, the guy gets his seat back, and suddenly, banks, small-caps, and Trump Media itself are having a field day.
And then there’s Tesla—up 14% after Trump announced he’s making Elon Musk head of some government efficiency commission. Apparently, Musk’s Twitter-backing paid off. Trump took the mic to credit Musk as a business genius, and boom—Tesla’s stock skyrockets.
Banks and small caps: A comeback story
So here’s what went down. The Dow Jones Industrial Average, S&P 500, and Russell 2000 all hit the gas, reaching levels we haven’t seen in years. The Dow flew past 3%, the S&P 500 jumped more than 2%, and the Russell 2000—the go-to for small-cap U.S. companies—blew up nearly 5%, landing at a high it hasn’t seen in about three years.
Big bank stocks? You better believe they took off too. JPMorgan Chase, Bank of America, and Goldman Sachs rose between 8% and 12%, which is massive. The big appeal? A way looser regulatory environment.
“There’s an expectation that regulations will ease under Trump,” said David Ellison, who manages Hennessy Funds and has a soft spot for bank stocks. Scott Chronert over at Citi backed him up, saying markets have “priced in a pretty strong mandate for the Republicans.”
Here’s the kicker. Trump’s win also got analysts buzzing about Basel III. If you’ve never heard of it, it’s a set of global banking regulations that would force U.S. banks to hold more capital. Right now, Basel III requires a 9% increase in capital, but under Trump, those numbers could look a whole lot different. Greg Hertrich from Nomura is betting we might even see bank mergers if the capital requirements ease up.
And don’t get it twisted—this market explosion isn’t just for the fat cats. Small caps saw some serious love. ClearBridge Investments’ Jeff Schulze said it best: “Business animal spirits could be rekindled.” Translation: companies might actually start spending again.
Tech stocks split on Trump’s policies
Moving on to tech, semiconductors got a boost, but it’s not all happy faces. Chip stocks are on the up, with Nvidia climbing a solid 3.5%. The chipmaker index saw a 2.3% gain overall. But not everyone’s thrilled, especially with Trump’s stance on the U.S. CHIPS Act—the legislation that funds chip production in the U.S.
Trump thinks it’s soft. Instead, he’s looking to slap tariffs on imported chips, especially those from Taiwan’s TSMC. Guess what? TSMC’s U.S.-listed shares took a 2.3% dive.
And then, there’s the whole renewable energy crowd. If you’re in green energy, you probably had a rough day. Stocks like NextEra Energy and First Solar dropped, with the S&P 500 energy index finishing up 3.5%. Trump’s energy playbook? Drill, baby, drill.
He’s all about maxing out U.S. fuel production and putting Biden-era climate measures in the rearview mirror. Plug Power and Sunrun, two big names in clean energy, saw losses over 20%. So, yeah, this new White House is not looking good for solar panels.
Tesla? That’s a whole different story. Musk’s buddy act with Trump got Tesla’s shares up 14%. But not everyone in the EV space is riding high. Rivian dropped 10%, and Nikola went down 3.6% after Trump hinted he might kill off the $7,500 EV tax credit. Tough break for the other guys in electric cars. But it looks like Tesla’s the golden child here.
Crypto and China stocks feeling the pressure
Crypto stocks and Bitcoin didn’t get left behind. Trump is pro-crypto—at least he’s more favorable than any of his predecessors. Bitcoin hit a record high, bringing stocks like Coinbase and MicroStrategy along for the ride.
Coinbase’s shares went up 28%, and MicroStrategy gained 12%. Crypto investors are banking on a supportive regulatory climate with Trump back in office. Riot Platforms and MARA Holdings joined the party, as both stocks posted gains.
But U.S.-listed Chinese stocks? Not the same story. Tensions between the U.S. and China are ramping up, and Chinese stocks took a beating. The iShares MSCI China ETF dropped by 2.4% as Trump’s team pushed for more import tariffs.
This time, we’re talking a 10% universal tariff on all imports and 60% on anything coming from China. It’s a strategy that could ripple across global markets, especially if it triggers a full-blown trade war.
Trump’s win also spiked demand for U.S. detention centers. Geo Group and CoreCivic, two private prison operators, saw their stock prices skyrocket—up 39% and 32%, respectively. Trump’s hard stance on immigration, which includes a promise of mass deportations, makes these prison companies hot stocks again.
Steel and retail sectors react to tariff fears
Let’s talk steel. Trump’s got big plans for U.S. steelmakers, and investors are pumped. Cleveland-Cliffs, Steel Dynamics, and Nucor all soared, as Trump’s domestic protection stance means potential price boosts for U.S. steel. Cleveland-Cliffs jumped 21%, while Nucor gained 16%.
Analysts think tariffs under Trump could shield U.S. steel companies from cheaper foreign competition, making it easier for these companies to hike prices.
Retail stocks, however, took a hit on Wednesday. Those that rely on China for goods felt the burn, with Bank of America downgrading Five Below to “underperform” from “neutral” and Yeti from “buy” to “neutral.” Five Below fell about 7%, Yeti dropped by 9%, and Dollar Tree and Dollar General also posted losses.
For these retailers, Trump’s proposed tariffs could mean one thing—higher import prices. And that’s never good news for the bottom line.
Planet Fitness, on the other hand, got a 6% bump after CNBC reported the chain is looking to acquire the bankrupt budget gym chain Blink Holdings.
It’s a wild day for traders, with several big names moving in midday trading. Trump Media & Technology, controlled by Trump, rose nearly 5%, while Phunware, the developer of his campaign’s app, climbed 5%. CVS Health didn’t miss out either.
The pharmacy giant soared 10% after reporting third-quarter revenue of $95.43 billion, beating expectations. But it missed on adjusted earnings, reporting $1.09 per share instead of the expected $1.51.
On the downside, cannabis stocks crashed after Florida voters rejected a ballot to legalize marijuana. Tilray tanked 14%, with Canadian companies Aurora Cannabis and Canopy Growth losing 18% and 23%, respectively.
Super Micro Computer also took a dive, plunging 24% after missing analysts’ revenue expectations for its December quarter and announcing it’s scrambling to catch up on financial reporting.
It’s clear that Wall Street isn’t exactly upset to see Trump back.
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