Why Bitcoin, Banking Stocks and More Are Rising After Trump Wins
The stock market rose to an all-time high on Wednesday following Donald Trump’s presidential election victory. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite indices reached new record levels.
Here’s what you need to know about why the market reacted the way it did and what it means for your investing strategy.
Why markets rose after the elections
Analysts attribute market growth to two key factors:
-
Reducing uncertainty. As I said earlier , the prospect of a new government and potential policy changes can create a whirlwind of speculation, leading to market volatility that can frustrate even seasoned investors. The election result – regardless of the winner – removed the uncertainty that had weighed on markets ahead of the vote. In fact, the US stock market has historically tended to rise no matter which party wins the White House.
-
Prospects for a business-friendly government. Investors are looking to pro-business policies from the second Trump administration and the Republican-controlled Senate.
The Dow closed above 800, or 2.9%, while the S&P 500 and Nasdaq added 2.2% and 3.9%, respectively. As we’ve already seen, Trump has a penchant for rollbacks or rollbacks of regulation, which benefits sectors that might have faced greater scrutiny under a Harris administration. Stocks in the banking, energy and technology sectors were among the biggest gainers in the days following the election.
What does this mean for you
While this news may make it tempting to buy Tesla stock or Bitcoin, you might want to take a step forward first. Typically, financial advisors caution investors against making sudden and drastic changes to their portfolios due to this one-time event.
The so-called “Trump trade” could easily turn into a bumpy ride – investors should be wary that some elements of Trump’s economic platform, such as tax cuts and tariffs, could stoke inflation. In addition, at present, all the details of the timing and implementation of the republican political program are hardly clear.
You should never suddenly change your investment strategy in response to specific election results. Instead, now is the time to balance things out and make sure you’re not overly exposed to any one sector or company. So while growth may be tempting, always evaluate your overall asset allocation first before jumping into action.
Allowing current events to constantly influence your financial decisions can lead to emotional stress and decision-making influenced by fear or overconfidence. After all, you’re not as objective as you think —here are some tips on how to avoid losing money because of it . Ultimately, experts recommend staying disciplined and sticking to your long-term investment plan, no matter who occupies the White House.
And if you’ve made some profits and expect more expenses in the short term, converting some of your earnings into cash or certificates of deposit may be a good move.