Policy Uncertainty Shadows Market Relief

Stock Market Surge After Trump’s 2024 Election Victory, But Uncertainty Looms

The stock market soared following Donald Trump’s victory in the 2024 U.S. presidential election. Investors cheered the result, pushing major indices to record highs. The Dow Jones Industrial Average climbed 4.6% during election week, the S&P 500 gained 4.7%, and the Nasdaq Composite surged 5.7%.

However, the momentum faded quickly. By the following week, markets gave back a portion of their gains as investors began scrutinizing what Trump’s presidency could mean for the economy and corporate America.

A Year of Election-Driven Volatility

Election-related uncertainty dominated 2024, with investors weighing potential outcomes and their market implications. Speculative “Trump trades” and “Harris trades” reflected contrasting expectations for the candidates’ economic policies.

Polling suggested a tight race, keeping anxiety high. This contributed to a 1% drop in the S&P 500 in October, extending a 20-year trend of weak performance during election years.

“Market jitters during election seasons are common,” said Steven Wieting, Chief Economist at Citi Wealth. “When uncertainty clears, markets often bounce back—but this year’s rally was particularly strong.”

Sectors React to Trump’s Policies

Trump’s victory ignited sector-specific rallies. Cryptocurrencies exploded, with Bitcoin reaching a record $90,000 and Dogecoin doubling, fueled by Trump’s pro-crypto platform.

The U.S. dollar strengthened to a one-year high, as investors anticipated protectionist trade policies like tariffs. Financial and tech stocks also climbed on hopes of deregulation and the extension of Trump’s 2017 corporate tax cuts.

“The financial sector is poised to benefit the most,” said Marco Pirondini, Chief Investment Officer at Amundi. “Even partial policy implementation could significantly boost earnings.”

Lingering Concerns

Despite initial optimism, investors are now grappling with fresh uncertainties. Key questions surround Trump’s policies on trade, immigration, and geopolitical conflicts, including wars in Ukraine and the Middle East.

“We’re in a period of adjustment,” Wieting explained, noting that markets are awaiting clarity on Trump’s early moves, including tariff policies that could affect inflation and global trade dynamics.

Geopolitical tensions and fiscal challenges, such as the $1.8 trillion deficit and ballooning national debt, add to the unease. Trump has proposed a “Department of Government Efficiency,” led by Elon Musk and Vivek Ramaswamy, to address the deficit, but details remain scarce.

“The debt and deficit are significant headwinds,” said Robert Conzo, CEO of The Wealth Alliance. “Wall Street is watching closely.”

What’s Next?

Investors are now turning their attention to key indicators, including earnings reports from Walmart, Nvidia, and Target, as well as Federal Reserve updates on inflation and interest rates.

While Trump’s election initially boosted market confidence, the sustainability of the rally remains uncertain.

“Markets thrive on clarity, and while some uncertainties have been resolved, many more remain,” Conzo noted. “The question now is whether this market has the legs to keep running.”

For now, investors are left balancing cautious optimism with the complexities of navigating a new political and economic landscape.