U.S. stocks soared Wednesday in the wake of Donald Trump’s sweeping election victory as investors priced in potential gains for a wide range of industries and a near-term boost to economic growth.
In early trading, the Dow Jones industrial average surged more than 1300 points, or about 3%, with expectations that a second Trump presidential term will bring major policy changes, including more tax cuts, more deregulation, more mergers and acquisitions and more domestic crude production.
Some of the biggest winners were banking firms and oil companies. Trump’s company that runs his social media platform took off, as did bitcoin, thanks to Trump’s remarks that he would make the U.S. the dominant crypto market in the world.
Shares of Tesla, owned by Elon Musk, a big Trump supporter, were up more than 25% in early morning trading, even as other green energy stocks sank under the weight of Trump’s well-known bashing of climate change policies.
Economists were expecting an early Trump-bump given his pro-business stance. He has promised not only to extend expiring provisions in his massive tax cuts in 2017, passed during his first term, but to drive the corporate tax rate down even further.
But Trump also plans to increase tariffs on imports, especially on Chinese goods, and to deport millions of undocumented immigrants. If followed through, these actions are likely to be inflationary, cause business disruptions, shrink the labor supply and slow economic growth down the road.
Stock markets in Europe and some Asian countries, particularly China, were down Wednesday.
Trump will be taking office having inherited an American economy that has performed very well, despite the discontent voiced among many voters who may have been the Achilles’ heel of Vice President Kamala Harris’ candidacy. U.S. growth has been strong, unemployment very low, and inflation — which soared in 2022 — has come down to much more modest levels.