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U.S. stocks rallied in after-hours trading on Tuesday night (local time), with bitcoin hitting a new record high as Wall Street digested the results of the early presidential election.
Dow futures jumped more than 600 points, while the S&P 500 jumped half a percentage point as early election results were released Tuesday night.
The US dollar index hit its highest point since July.
Cryptocurrencies, which are considered part of the so-called Trump’s trades also jumped on Tuesday.
Bitcoin surpassed $74,000 on Tuesday night, hitting an all-time high.
His previous record was set in early March.
Former President Donald Trump has expressed support for cryptocurrencies in the past.
Dogecoin, the volatile cryptocurrency championed by Elon Musk, a high-profile Trump supporter, has jumped more than 20 percent over the past day.
While Trump led Vice President Kamala Harris in early returns, several key battleground states had yet to be called Tuesday night.
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Still, with the race between Harris and Trump extremely close, economists are warning of potential volatility ahead, especially if the results take days — or even weeks — to finalize.
In 2020, it took several days for Joe Biden to be declared the winner, while the 2000 election between George W. Bush and Al Gore famously dragged on for more than a month.
The Dow ended Tuesday up 425 points, or 1 percent; The S&P 500 gained 1.2 percent; and the tech-rich Nasdaq climbed 1.4 percent, all underscoring investor optimism as Americans voted.
Historically, stocks have often risen on election day.
This marks the sixth consecutive election day gains for the S&P 500 and Nasdaq.
“The market appears to be in an anticipatory recovery now that the election is here,” Louis Navellier of Navellier & Associates said in a note to investors on Tuesday.
“While it’s still up to everyone to decide where the chips will fall in the election, falling either way is a relief.”
The prospect of a delayed or disputed result could add to market swings.
“With Election Day finally here, expect more market volatility, especially if the wait for the result is long or contested. Political divisiveness poses a risk to investor sentiment,” said Adam Turnquist, chief technical strategist at LPL Financial.
“Although we’ve been through the ‘hangovers’ of the 2000 Bush vs. Gore election, legal challenges, recounts and the experience of January 6, perhaps the markets are battle-tested for electoral chaos,” Turnquist added.
As the results begin to roll in, market sectors could react differently depending on the leading contender.
Harris’ leadership could boost green energy and manufacturing stocks, given expected stimulus for infrastructure spending, clean energy and social programs. However, technology and finance may face greater regulatory scrutiny.
Trump’s leadership would favor the energy, financials and industrials sectors, with investors expecting continued tax cuts and a loose regulatory stance, Turnquist said.
Still, stocks have historically risen in the months following an election regardless of the outcome. “Most of the movement in stock prices over time is driven by earnings, inflation and interest rates. Politics matters, especially tax and trade policy, but not as much as some people think,” Turnquist said.
Traders are preparing for a turbulent week.
Just two days after Election Day, the Federal Reserve will announce its latest interest rate decision, the first since cutting rates by half a point.
The Fed’s announcement comes amid new data showing signs of a cooling labor market, adding another layer to an already fraught week for markets.
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