NEW YORK: Wall Street jumped in upbeat trading on Monday, on a greater chance of presidential candidate Donald Trump winning a second term after surviving an assassination attempt, while interest-rate cut hopes also aided market sentiment.
Under Trump, markets expect a hawkish trade policy and looser regulations over issues from energy policy to cryptocurrency.
Both the S&P 500 and the Dow touched intraday record highs, while Treasury yields rose, as investors also anticipate Trump’s policies would increase inflationary pressures and government debt.
Online betting site PredictIt showed bets of an election win at 67 cents for Trump, after an assassination attempt on his election rally on Saturday, up from Friday’s 60 cents, with a victory for Joe Biden at 26 cents.
“The narrative for the day rests on the “Trump Trade” with many investors assuming the weekend events add to the former President being re-elected,” said Bob Savage, head of markets strategy and insights at BNY Mellon.
Trump-linked stocks soared, with Trump Media & Technology Group jumping 26.8%, while software firm Phunware and video-sharing platform Rumble rose 4.6% and 5.4%, respectively.
Crypto stocks also leapt as bitcoin rose to a two-week high. Coinbase Global, Marathon Digital holdings and Riot Platforms advanced between 8.9% and 10.9%.
Other stocks that are expected to benefit from Trump’s second term climbed, with Gunmaker Smith & Wesson and prison operator GEO Group gaining 11.9% and 10.5%, respectively.
Sustained hopes for Federal Reserve interest rate cuts also kept traders upbeat. Investors priced in an 88% odd of a 25-basis-point rate cut by September and two cuts for 2024, according to LSEG data.
Comments from Federal Reserve Chairman Jerome Powell and San Francisco Fed President Mary Daly will be closely watched for their assessment of last week’s inflation data.
The small-cap Russell 2000 gained 2.2% to its highest since January 2022, in continued evidence of broad-based market gains.
As the quarterly corporate earnings season ramps up this week, it remains to be seen if megacaps can justify their high valuations and if lagging market sectors can continue to build on gains.
In the near term, it looks like the rotation from tech-heavy megacaps to small caps will continue, but to sustain this broadening, we will need to see good earnings numbers, said Ben McMillan, chief investment officer at IDX Advisors.
At 12:01 a.m. ET, the Dow Jones Industrial Average was up 328.71 points, or 0.82%, at 40,329.61, the S&P 500 was up 40.53 points, or 0.72%, at 5,655.88, and the Nasdaq Composite was up 163.54 points, or 0.89%, at 18,561.98.
The S&P 500 financials index jumped 1.5%, with Goldman Sachs hitting a record-high after second-quarter profit more than doubled.
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