• The U.S. stock market rallied sharply as Donald Trump reclaimed the U.S. presidency, with S&P 500 and Dow futures hitting record highs.
• Stocks expected to perform well under Trump, such as Trump Media & Technology Group and Tesla, saw significant jumps.
• The Republican party's control of the U.S. Senate could give Trump an easier route to push through desired legislation, potentially boosting investor confidence.
• The market's positive response reflects the certainty a Trump presidency brings, and the potential benefits of his proposed policies for corporations and the economy.

In a historic turn of events, the U.S. stock market witnessed a sharp rally as Donald Trump reclaimed the U.S. presidency, four years after he was voted out of the White House. The futures tied to the S&P 500 and the Dow hit record highs, marking a significant shift in the financial landscape. As the votes added up, the so-called Trump trades rallied, U.S. Treasury yields surged, and the dollar gained strength. Bitcoin also hit a record high, reflecting the market's response to Trump's victory.

The Dow futures jumped more than 1,200 points, while those tracking the benchmark index edged closer to the psychologically significant 6,000 level. Dr. David Allen, portfolio manager at Plato Global Alpha Fund, noted that markets crave certainty, and a Trump victory was likely priced in at the margins.

The small cap Russell 2000 futures soared 6.2% to their highest levels since early 2022, indicating that domestic-focused stocks are expected to benefit from an easier regulatory and tax regime. They are also expected to be less exposed to likely import tariffs.

Trump's Victory and the Stock Market

Certain stocks that were expected to perform well if Trump won a second term saw a significant jump. Trump Media & Technology Group soared 30.7%, and prison operators Geo Group and CoreCivic gained 30% and 22.4%, respectively. Tesla shares also leapt 15% as top shareholder and CEO Elon Musk has supported Trump throughout his electoral campaign.

The Republican party also gained control of the U.S. Senate, and posted early gains in the battle to maintain control in the House of Representatives. A so-called clean sweep, in which one party captures the presidency, the House, and the Senate would give Trump an easier route to push through desired legislation.

Russell Shor, senior market specialist at trading platform Tradu, raised the question of whether Trump's win will bring full Republican control or a split government. If Republicans take both chambers, Trump could have more room to cut corporate taxes-a potential boost for investor confidence.

The Impact on the Economy and Future Predictions

The VIX, a measure of market volatility, dropped sharply to its lowest since September. Investors have been bracing for several days of uncertainty over who the winner of the presidency would be. Wall Street analysts expect Trump's plans for restricted immigration, tax cuts, and sweeping tariffs to put upward pressure on inflation and bond yields, while corporations could benefit from his tax and regulatory policies.

Later in the day, the Federal Reserve was expected to kick off its two-day meeting where the central bank is expected to ease the benchmark interest rate by 25 basis points. However, bets on a December rate cut reduced slightly to 68% from nearly 80% on Monday, as per CME FedWatch.

In other news, Jenniffer González of the pro-statehood New Progressive Party was leading polls early Wednesday in a historic gubernatorial election in Puerto Rico. NBC News projected that Trump would defeat his Democratic rival, Kamala Harris, after winning 276 Electoral College votes, including key swing states of Pennsylvania, North Carolina, and Georgia.