U.S. stock index futures soared Wednesday following the election of Donald Trump as the 47th president of the United States as Republicans set course to sweep both the Senate and the House of Representatives.
At the start of the day Dow Jones futures were up nearly 1,255 points, up 3%, S&P 500 futures were up 133 points, up slightly 2.3%, and Nasdaq 100 futures were up 345 points, up slightly 1.7%.
Trump wins White House, reds likely to sweep
Associated Press and other major news networks have reported Trump as the winner of the 2024 presidential election, and this confirms his return to The White House, as had been declared earlier in the day.
In turn, earlier coverage by the Associated Press and other regional networks indicated that Republicans had taken the majority in the Senate, the upper house of the U.S. Congress, and were also on course to win the House of Representatives, which would increase the likelihood of a Republican sweep in the 2024 election.
“The big question for markets now is whether Trump’s victory will bring total Republican control or divided government. If Republicans take both houses, Trump could have more room to cut corporate taxes, which could boost investor confidence,” said Russell Shor, senior markets specialist at Tradu.
Republican control of Congress – the so-called “red sweep” – means a much easier path for Trump to enact significant policy changes. Trump is expected to enact more inflationary policies, given his protectionist stances on everything from immigration to trade.
The dollar and Treasury yields soared on this idea, and the greenback was able to reach a four-month high.
A quick conclusion to this year’s presidential election also presents a considerable point of uncertainty for the equity markets, due to the turmoil that surrounded the conclusion of the last presidential election.
Federal Reserve meeting in the spotlight
Wall Street indexes rose sharply on Tuesday, recovering some of their recent losses thanks to gains in technology stocks, with risk appetite boosted by expectations surrounding a Fed rate cut at the end of the week.
The S&P 500 rose 1.2%, the Nasdaq Composite was up about 1.4%, and the Dow Jones Industrial Average gained about 1%.
All three indices rebounded from the all-time highs achieved in late October following mixed results from large technology companies, while uncertainty surrounding future Fed rate cuts also weighed.
The Fed is widely expected to cut interest rates by 25 basis points at the end of its two-day meeting on Thursday.
Any hints about the Fed’s plan for future rate cuts will be closely scrutinized given recent signs of tightening inflation in the United States. The central bank has remarked on a largely data-driven approach to some future easing.
Crude oil prices down after API release
Oil prices declined on Wednesday after industry data pointed to an increase in U.S. crude inventories, while the dollar rose on Trump’s election advance.
Data from the American Petroleum Institute released Tuesday said U.S. crude inventories rose by 3.13 million barrels the previous week, higher than the 1.1 million barrels expected.
Official inventory figures will be released later on Wednesday, but if the API release is confirmed, it would raise concerns about cooling fuel demand in the U.S., especially as the winter season approaches.
