Why Bitcoin, Bank Stocks and More Are Surging After Trump's Win

Stocks notched record highs on Wednesday following the re-election of Donald Trump in the presidential election. Each of the three major indices — the Dow Jones Industrial Average, broad-based S&P 500 and tech-heavy Nasdaq — climbed to all-time highs.

Analysts say the surge in the markets on Wednesday is driven by two factors: Elimination of the uncertainty that held sway prior to the election, and the prospect of a business-friendly White House and Senate. (Control of the House of Representatives had not yet been determined as of Wednesday afternoon.)

“The combination of a Fed easing cycle, AI-driven technology boom and a pro-business administration is extremely bullish for the stock market,” Jay Hatfield, CEO of Infrastructure Capital Advisors, said in a statement.

The Russell 2000, an index of small-cap stocks, also surged on Wednesday on the assumption that Trump-led tax and regulatory policies would especially benefit smaller companies.

While the prospect of lower taxes and fewer regulations are driving stocks higher, analysts also warn that other pieces of Trump’s agenda — most notably tariffs — could blunt this economic momentum.

“The prospect of a Republican sweep and lower taxes is adding to the market enthusiasm,” Yung-Yu Ma, chief investment officer at BMO Wealth Management, said in a statement. Ma added, though, that the exuberance might be short-lived. “That may get tempered in the coming weeks by more details regarding tariff policy or a continued rise in long-term Treasury yields,” he said, noting in particular that “uncertainty over tariffs” is a potential headwind.

While Trump is hardly in lockstep with the free-trade supporters that make up much of the Republican party, his penchant for rolling back or undoing regulations is benefiting sectors that might have experienced greater scrutiny under a Harris administration. Here's what happened in the first hours after markets opened post-election.

Banking

Stocks of both commercial and investment banks were gaining as the election results spread. JPMorgan Chase, Wells Fargo and Goldman Sachs all saw their stocks surge by double digits as of midday Wednesday.

BlackRock Investment Institute strategists said in a note that a Trump administration would likely be good for financial firms. "Trump's win likely means some deregulation, including rolling back banking regulations,” Reuters reported.

Crypto

Bitcoin surged to a record high, touching $75,000 at one point. Other cryptocurrencies like ether also jumped, as did platforms for trading the assets like Coinbase and Robinhood.

The prospect of less regulation and lower taxes on the crypto industry, combined with the president-elect's vocal support for cryptocurrency on the campaign trail, all pushed these assets higher, Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, told CNBC in an interview. Also boosting this sector is the expectation that Trump will replace Gary Gensler, the current chair of the U.S. Securities and Exchange Commission, who has been a thorn in the industry's side during his tenure at the agency.

Chips

Shares of chip companies like Nvidia and Intel jumped. American chip manufacturers in particular would benefit if Trump levies tariffs on chips imported from Taiwan, as he has suggested he would do.

Although Trump criticized President Joe Biden’s CHIPS and Science Act during the campaign, political and market observers expect the law, which benefits the domestic chip industry, to stand. Republican lawmakers have criticized the legislation, but much of the investment it triggered has taken place in GOP strongholds like the Southeast. House Speaker Mike Johnson recently walked back a comment that Republicans would repeal the act if given the opportunity to do so, saying instead that he and his fellow Republicans wanted to "streamline" it.

Big Tech

Internet giants are likely to experience a mixed bag under a Trump administration. On Wednesday, stocks of Google parent Alphabet and Amazon rose, while shares of Meta, the parent company of Facebook, Instagram and WhatsApp, fell. Although both Democratic and Republican lawmakers have criticized the dominance of tech giants, the expectation is that a Republican executive branch will be less aggressive in pursuing antitrust and anti-competitive complaints against Big Tech firms, William Kovacic, a law professor at George Washington University and former chair of the Federal Trade Commission, told Reuters.

EV manufacturing

Despite the rhetoric from Trump — and other members of the Republican party — about dismantling President Biden’s signature Inflation Reduction Act, which included incentives for electric vehicle production, the fate of the EV market under a Trump presidency is unclear.

Trump is a big booster of domestic oil production — and a beneficiary of these companies’ largesse when it comes to political donations — and he has said he wants to roll back initiatives and incentives to ramp up EV production.

But on the day after the election, shares of EV heavyweight Tesla surged, jumping 13% on the expectation that the U.S.-based company would benefit from potential tariffs on imported EVs and the rollback of subsidies that Tesla's smaller competitors rely on more heavily.

What investors should do now

While surging stocks might make it tempting to buy shares of Tesla or bitcoin, financial pros say it's smarter to pump the brakes first. Advisers caution that it’s never a good idea to make big, sudden changes to your investment plan based on one-time events.

This rally could be a good time, though, to evaluate your asset allocation and determine if you’re holding too much of any one sector or company. And if you're approaching retirement or anticipate a big expense coming up soon, converting some of your earnings into cash or certificates of deposit could be a good move.

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