Michelle ThompsonFinancial markets responded to Donald Trump’s presidential win with a strong rally, despite concerns about his tariffs, tax cuts, and deportation plans impacting the economy. A week later, the surge seems to be stabilizing, with the US stock indexes closing lower on Tuesday after a 5% rise since November 4, the day before the election. Here are some companies that have gained, as investors speculate on the next four years.
Tesla
Tesla’s stock has risen about 35% since November 4, boosting its market value above $1 trillion and adding over $50 billion to Elon Musk’s wealth, as he holds a 13% stake. Investors are betting that a Trump administration may ease investigations into features like self-driving, and that Musk’s ties with Trump could help Tesla navigate changes in US-China relations, where it has a strong presence. Despite expectations that Trump might reduce government incentives for electric vehicles, analysts believe this could actually strengthen Tesla’s dominance, making it harder for competitors to catch up.
Cryptocurrency
Bitcoin’s price surged over 25%, reaching new all-time highs and briefly surpassing $89,000 following Trump’s victory. This jump signals that investors expect major changes for the cryptocurrency sector, which faced increased scrutiny under Biden’s administration due to concerns over fraud and scams. Although Trump previously labeled crypto a scam, he shifted his stance during his campaign, pledging to make the US the “crypto capital of the planet.” He proposed creating a strategic bitcoin reserve and replacing SEC Chair Gary Gensler, who angered crypto firms with legal actions. Crypto companies are pushing for sector-specific regulations, which may gain traction in Congress this year.
Banks
Leaders of major banks: (l-r) Charles Scharf of Wells Fargo, Brian Moynihan of Bank of America, Jamie Dimon of JPMorgan Chase, and Jane Fraser of Citigroup.
Shares in major US banks have risen by double digits since the election, as investors believe financial firms will benefit from Trump’s promises of reduced regulation. Trump will have influence over pending rules that determine how much cash banks must hold as a reserve. He is also expected to part ways with Lina Khan, the current head of the Federal Trade Commission, whose anti-monopoly stance has slowed deal-making, a vital area for banks. Shares in Capital One and Discover, which have a merger under regulatory review, have surged over 15% since the election results.
Prison Operators
Shares in major private prison companies GEO Group and CoreCivic have surged around 70% since November 4, reflecting investor optimism over Trump’s immigration policies, including his plan to deport millions of migrants. In contrast to President Biden’s 2021 directive to halt contracts with private prisons, Trump is expected to reinstate such policies, boosting business for these firms. His early actions as president are focused on assembling an immigration policy team, signaling that immigration will be a key priority.
The Dollar
The dollar index is at its highest level since April, rising over 2% in the past week. While this benefits American tourists, it signals a more uncertain economic outlook. The dollar’s strength is linked to interest rates, which investors now expect to remain higher for longer. This rise reflects stronger-than-expected US economic data from before the election. However, concerns about Trump’s policies—such as lower taxes, reduced immigration, and new trade barriers—could put pressure on inflation, making the Federal Reserve hesitant to cut rates. Last week, the Fed offered limited guidance, citing uncertainty over the effects of Trump’s policies.
