Stocks rise after decisive Trump victory

Major stock indexes jumped on Wednesday morning in the wake of Donald Trump's decisive victory in Tuesday's presidential election.

When markets opened at 9:30 a.m., the S&P 500 was up 2%, while the tech-heavy Nasdaq climbed at about the same pace. The Dow Jones Industrial Average gained 1,300 points, or 3.2%.

The last time the Dow, which represents larger, more established companies, posted a 1,000-point increase in a single day was November 2022.

NBC News predicts Trump will finish with 276 Electoral College votes in his victory over Vice President Kamala Harris, his Democratic opponent. Republicans are also close to winning a majority in the Senate, while the House of Representatives is still too close to make a decision.

Trump has promised to extend or pass sweeping tax cuts and deregulation measures that have broad support across the business community. This is driving the markets higher for now.

“Investor sentiment is pro-growth, pro-deregulation and pro-markets, as seen in market moves overnight,” said David Bahnsen, chief investment officer at Bahnsen Group, in a note to clients. “There is also an assumption that (merger and acquisition) activity will pick up and that further tax cuts will come or the existing ones will be extended. This creates a strong environment for stocks.”

Shares of major banks, which often benefit from increased M&A activity, posted strong gains: JPMorgan rose 6.8%, Bank of America rose 6.6% and Wells Fargo rose 11%.

The gains also impacted the Russell 2000 index, which represents smaller companies. This benchmark rose 4%.

History also predicts a better year for stocks after an election year: According to Isaac Boltansky, managing director and director of policy research at BTIG, the S&P 500 finished higher in nine of the last 11 years in which a president was inaugurated.

“Of course, there are acute sectoral considerations and broader macroeconomic implications, but generally the U.S. economy continues to move forward,” Boltansky wrote in a note on Wednesday.

In addition to the stock gains, there were signs that investors were also bracing for a rise in inflation and growing deficits. Investors sold bonds, causing the 10-year Treasury yield to rise by 20 basis points. When inflation expectations rise, bonds tend to lose value even as interest rates rise.

Oil prices also fell sharply as the U.S. dollar surged on expectations that Trump's promise to raise tariffs would ultimately lead to a decline in U.S. imports. The USD benchmark index posted its biggest daily rise since June 2016.

That represents a market pullback against one of Trump's key policy goals: a weaker dollar that would support U.S. exports.