Following President-elect Donald Trump's decisive election victory, the stock market surged to new record highs, prompting a sense of euphoria within the Trump camp. The rally, which began before the market opened on Wednesday, saw the Dow closing at a new record high, marking its best day since 2022. The S&P 500 and Nasdaq also reached new highs, with the S&P surging by 2.5% and the Nasdaq closing 2.95% higher. Additionally, the US dollar experienced its best day in two years, and Treasury yields rose.
While some may interpret the market rally as a celebration of Trump's victory, others suggest that it may be more a result of the swift resolution of the election, which had been a source of uncertainty for investors. The possibility of Trump and his allies contesting the election outcome in court had cast a shadow over the US economy and stock market in recent months.
During his previous term, Trump often viewed the stock market as a key indicator of his performance in office, often using it as a gauge of his policies' success. He would strategically make announcements related to trade deals, tax cuts, and other measures to influence market movements, particularly during critical political periods. His administration's efforts to promote his policies on television were aimed at boosting market confidence and, in turn, his own approval.
Investors, however, have expressed concerns about Trump's proposed tariffs and potential tax increases under Vice President Kamala Harris. The market's reaction, Trump believes, reflects relief that Harris did not win the election and serves as a form of validation for his policies.
