Stock market rises after Donald Trump's election victory

The Dow Jones Industrial Average rose more than 1,300 points in early trading on Wednesday as investors showed enthusiasm for a second Donald Trump presidency.

The Nasdaq and S&P 500 each posted a more modest increase, rising 2%.

Bond markets fell as money moved into so-called “Trump trades,” primarily in stocks but also in cryptocurrencies. Stocks in banks, private prisons and gun manufacturers all posted gains early in the trading day.

Trump in the early hours of Wednesday became the first person in more than a century to return to the White House after an absence following his first term. Wisconsin's victory over Vice President Kamala Harris sealed the deal.

One particularly volatile stock, Trump Media & Technology Group (parent company of Truth Social), continued its wild swings on Wednesday, posting high single-digit gains on nearly double its normal volume.

It will be another two months before Trump's new term officially begins, but during the campaign he promised to cut taxes and also impose sweeping tariffs on a range of goods. While the Biden administration has retained some of the tariffs imposed by Trump during his first term, many economists believe the new and expanded tariffs could have a negative impact on U.S. consumers and the economy.

Economic conditions have improved in recent months, inflation has fallen and the Federal Reserve has begun efforts to lower interest rates. The Fed is scheduled to meet on Thursday and is expected to make another rate cut.

Inflation was a major factor in Trump's loss to Harris. Many voters chose to switch and appeared to associate Harris with Biden's economic record. The grueling experience of Covid and then the worst rise in consumer goods prices in more than four decades left many working Americans unable to cover basic expenses.

A prominent business representative, billionaire Elon Musk, also played a role in Trump's re-election. The CEO of Tesla and owner of Twitter, now X, fully supported Trump during the strike and poured hundreds of millions into the effort to return him to the White House.