November 6th 2024.
The United States stock market experienced a surge in after-hours trading on Tuesday night, while the popular cryptocurrency bitcoin also hit a new record. This all occurred as Wall Street analyzed and processed the early results of the presidential election.
Futures on the Dow Jones Industrial Average saw a significant jump of over 600 points, while the S&P 500 also rose by half a percentage point as initial election results came in on Tuesday evening. In addition, the US dollar index reached its highest point since July.
As the night progressed, there were live updates and continuous coverage of the 2024 US election. Cryptocurrencies, which are often linked to the policies of former President Donald Trump, also saw a rise in value.
Bitcoin, in particular, reached an all-time high of over $74,000 on Tuesday night, surpassing its previous record set in March of this year. This surge can be attributed to the support that Trump has expressed for cryptocurrencies in the past.
Another popular cryptocurrency, Dogecoin, also experienced a significant increase in value of over 20% in just one day. This surge can be partially attributed to Elon Musk, a well-known supporter of Trump, who has championed Dogecoin in the past.
While early returns showed Trump leading Vice President Kamala Harris, several key battleground states were still undecided on Tuesday night. This tight race has economists warning of potential volatility in the market, especially if it takes days or even weeks to finalize the results.
In 2020, it took several days to declare Joe Biden as the winner, while the 2000 election between George W. Bush and Al Gore famously took over a month to finalize. Despite this uncertainty, the Dow closed 425 points higher on Tuesday, the S&P 500 gained 1.2%, and the Nasdaq climbed 1.4%, showing investor optimism as Americans exercised their right to vote.
It is worth noting that stocks have historically risen on Election Day, and this marks the sixth consecutive Election Day gain for the S&P 500 and Nasdaq. Louis Navellier of Navellier & Associates stated in a note to investors that the market seems to be experiencing a "relief rally" now that the election is finally here.
However, the possibility of a delayed or contested result could intensify market fluctuations. According to Adam Turnquist, the chief technical strategist for LPL Financial, the political divide in the country poses a risk to investor sentiment. He also mentioned the possibility of a long wait or legal challenges, referring to past experiences with the 2000 election.
As the results begin to pour in, different sectors of the market may react differently depending on the leading candidate. A Harris lead could drive gains in green energy and manufacturing stocks, while tech and finance may face stricter regulations. On the other hand, a Trump lead would favor energy, finance, and industrial sectors, as investors anticipate continued tax cuts and relaxed regulations.
However, regardless of the outcome, stocks have historically continued to rise in the months after elections. According to Turnquist, this is mainly due to factors such as earnings, inflation, and interest rates, rather than policy changes. He also stated that while policies do play a role, they are not as impactful as some may believe.
Traders are preparing for a potentially turbulent week, as just two days after the election, the Federal Reserve will announce its latest interest rate decision. This comes after the Fed cut rates by half a point and amidst new data showing signs of a slowing job market. This adds another layer of uncertainty to an already eventful week in the market.
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