“Trump Trade”: Election news leads to biggest 1-day stock market gain in 2 years

The “Trump Trade” was in full swing on Wednesday, entering the Wall Street history books with record results for all three major stock indexes.

The Dow Jones Industrial Average jumped 3.6%, its biggest one-day gain since November 2022. The SThe &P 500 rose 2.5%, while the Nasdaq gained nearly 3%.

The biggest gainers were companies and sectors that investors are betting will benefit from President-elect Trump's policies.

Bank stocks including JP Morgan Chase (JPM), Wells Fargo (WFC) and Bank of America (BAC) rallied on promises of lower taxes and less regulation. The Russell 2000 (RUT) small-cap index, which includes some regional banks, rose nearly 6%.

It was the biggest rise in the U.S. dollar since 2020, and Carl Icahn, the activist investor and billionaire, said it would lead to less regulation and more mergers and acquisitions.

Elon Musk was perhaps the biggest winner of the day. Shares of his Tesla Corporation (TSLA) rose nearly 15%. The world's richest person was a staunch Trump supporter and donated more than $130 million to Trump's campaign efforts. In his victory speech, the president-elect called Musk a “super genius” and promised him a role in his administration.

“The biggest benefit of a Trump victory would be for Tesla and Musk,” wrote Dan Ives, senior equity research analyst at Wedbush. “We believe a Trump presidency would be negative for the EV industry overall as EV rebates/tax incentives are likely to be eliminated. However, we see this as extremely positive for Tesla. Tesla has the scale and scope that is unparalleled in the electric vehicle industry, and this dynamic could give Musk and Tesla a clear competitive advantage in an environment where there are no electric vehicle subsidies, coupled with likely higher tariffs in China that will curb cheaper Chinese electric vehicle suppliers would continue to crowd out the U.S. market,” Ives wrote in a research note.

The cryptocurrency market also welcomed Trump’s return to the White House. Bitcoin (BTCUSD) posted a record close and climbed above $75,000. Trump has said he wants to make the US the “crypto capital of the planet” and plans to create a “strategic Bitcoin reserve.”

In September, he even launched his own crypto platform, World Liberty Financial, a new cryptocurrency trading company with family members.

At least on paper, Donald Trump saw his personal wealth skyrocket during Wednesday's stock market rally. Shares of his Trump Media and Technology Group (DJT), the parent company of his social media platform Truth Social, rose more than 30% at the market open but fell significantly to close only 6% higher. Nevertheless, the company achieved a market capitalization of around $7.2 billion, with Trump's majority stake worth around $4.1 billion.