U.S. stock futures experienced a significant uptick as investors processed the outcomes of the U.S. presidential election, a contest that appeared to secure a victory for Donald Trump over Kamala Harris. The Associated Press confirmed that Trump had clinched key swing states such as North Carolina, Georgia, and Pennsylvania, amassing 267 electoral college votes compared to Harris’s 224. While results from Arizona, Wisconsin, Nevada, and Michigan remained uncertain, the favorable election outcomes for Trump caused contracts on the tech-heavy Nasdaq 100 and S&P 500 futures to surge by approximately 1.7% and 1.9%, respectively. The Dow Jones Industrial Average futures rose by about 2.1%. Concurrently, futures tied to the 10-year Treasury note saw an increase of nearly 11 basis points, and Bitcoin rallied to record highs, signaling investor confidence in the so-called “Trump trade.”
Despite Trump’s seeming success, the election was not officially called by the AP at the time. The political landscape also shifted as Republicans took control of the Senate, flipping a Democratic-held seat in West Virginia with Jim Justice’s victory and unseating Senator Sherrod Brown in Ohio. With seven Senate seats remaining to be decided in key states like Pennsylvania and Wisconsin, the overall control of the House of Representatives remained ambiguous. The final rallies before the election saw Trump emphasizing last-minute tariffs and Harris advocating for a collaborative approach, which framed the financial expectations surrounding both candidates’ policies.
In the context of stock performance, the small-cap Russell 2000 Index outperformed its larger counterparts as hopes for Trump’s victory rose. Investors anticipated that Trump’s policies, including potential tax cuts and deregulation, would benefit smaller domestic businesses. The anticipated tariffs from a Trump administration led to a stronger U.S. dollar, advantageous for small-cap companies more closely tied to the domestic economy compared to larger multinational firms. The electoral gains for Republicans could also have long-term implications for Senate committees that govern banking regulation, especially with Sherrod Brown’s loss affecting future hearings and regulatory practices, favoring a Republican approach.
Bitcoin prices surged to unprecedented levels as predictions shifted favorably for Trump, with the cryptocurrency trading above $74,200 and leading gains across the sector. Other cryptocurrencies and related equities echoed this bullish sentiment, as major players like MicroStrategy and Coinbase saw their shares rise in the after-hours market. Currency traders responded to the early election returns by favoring the U.S. dollar, which gained strength against various currencies in anticipation of Trump’s potential tariff strategies that could tighten monetary policy and ultimately lead to higher inflation and interest rates.
Political prediction markets indicated increasing odds in favor of Trump as the election results unfolded, with platforms noting dramatic shifts favoring his candidacy compared to 10 percentage points earlier in the night. Observers noted that despite the uncertainty surrounding state outcomes, the rise in prediction markets reflected investor sentiment and anticipation. Ongoing live updates indicated how crucial congressional races and their outcomes might influence financial markets moving forward, emphasizing that the election results could affect key regulatory approaches across several economic sectors.
Market analysts were closely watching the potential impact of the election results on bond yields and overall market response. Growing expectations post-election pointed toward a volatile shift that could pressure global bond yields upward, potentially impacting equity markets too. Meanwhile, Tesla’s stock saw gains as election results rolled in, reflecting CEO Elon Musk’s alignment with Trump’s candidacy. The upcoming term was viewed as pivotal for Musk and Tesla, as the outcome could either hinder or accelerate the company’s forward momentum in sustainable energy and electric vehicle incentives, regardless of the race’s final results. As the night progressed, the markets exhibited a focus not only on the Trump versus Harris race but also on the broader implications of controlling congressional committees in key economic areas.
