Futures for the Dow The Jones Industrial Average rose 0.65%, the S&P 500 rose 0.5% and the Nasdaq 0.2% added.
So far, Republican and Democratic states have been reliably called. Arkansas, South Carolina, Kentucky, Indiana and West Virginia are in Donald Trump’s column. New Jersey, Delaware, Illinois, Rhode Island and Vermont are in Kamala Harris’ column.
NO Swing states have already been called, but there are signs that Trump has improved his performance compared to 2020 in other states such as Florida and New Hampshire.
The so-called Trump trade rebounded late Tuesday after declining earlier in the day and on Monday. The greenback rose, the US dollar index rose 0.7%. The 10-year Treasury yield rose 6.1 basis points to 4.35%, and Bitcoin rose 5.5%.
These assets have followed Trump’s political outlook as his tariffs, tax cuts and crackdown on immigration are seen as inflationary, limiting the Federal Reserve’s ability to further cut interest rates, while he has also rebranded himself as a champion of the crypto sector.
Meanwhile, shares of Trump Media and Technology rose 10% in after-hours trading close deeper in the regular session amid volatile trading.
Overseas markets were cautious about the final hours of the US election, as the next president could have a significant impact on the global economy, particularly trade. Trump has promised to increase tariffs across the board, with tariffs against China in particular expected to skyrocket. And on Monday, he threatened to impose a 25% tariff on imports from Mexico unless the country closes its border with the United States – and to raise the tariff rate to as much as 100% if the country does not comply.
In China, the CSI 300 index rose by 2.5%, as did that in Shanghai SSE The Composite Index gained 2.3%. In Japan, the Nikkei 225 rose 1.1% and the Topix rose 0.8%. In Europe, the Stoxx 50 rose 0.4%, while the Stoxx Europe 600 posted a gain of less than 0.1%.
If the vote count is disputed or delayed for an extended period of time, this could leave markets in limbo. Other races are also crucial, as the party that controls Congress also determines how much leeway the next president will have in enacting policies. Separately, the Fed concludes its policy meeting on Thursday with an expected 25 basis point rate cut.
Trump economics vs. Harris economics
Under another Trump administration, investors expect less regulation from the federal government. This is likely to boost bank stocks, cryptocurrencies and crypto stocks Coinbaseas well as companies in the oil and gas sector.
He has also threatened to roll back policies championed by President Joe Biden, including those promoting renewable energy and electric vehicles. Trump’s promise to curb immigration and launch a mass deportation campaign has also sent shares of prison operator Geo Group and higher CoreCivic.
A Harris administration is widely expected to provide more continuity with Biden’s and maintain policies promoting green energy and infrastructure. It has also unveiled plans to encourage greater housing supply, which could potentially benefit homebuilder stocks.
Their different attitudes to taxes will also affect corporate profits, personal income and stocks. Trump has promised to extend the tax cuts from his first term and lower the corporate tax rate even further. He has also announced a series of cuts, including taxes on tips, overtime pay and Social Security payments, as well as exemptions for the military, veterans and first responders. He even flirted with him Abolition of income tax in total.
Harris has supported extending Trump’s tax cuts to Americans earning less than $400,000, but not to the wealthiest. She has also pledged to raise the corporate tax rate and force the wealthy to pay taxes on unrealized capital gains, while expanding child tax credits and providing tax breaks for small businesses.
The next president faces massive US debt
Whoever the next president is, he or she will likely have to contend with skyrocketing U.S. debt and deficits.
But under a Trump administration, that could come sooner. Budget watchdogs warn of an exploding national deficit. While it will expand under either Trump or HarrisThe Penn Wharton budget model and the Committee for a Responsible Federal Budget have said that Trump’s policies would leave a much deeper hole. Trump ally Elon Musk has said he could cut federal spending by $2 trillion, but Skeptics point out that this is unlikely without reducing entitlements and the military or ruin the economy.
Neither candidate made deficit reduction a priority during the election campaign, but financial markets could push the issue. “Bond vigilantes” or investors protesting massive deficits by selling bonds to drive up yields are I’m already evaluating the choicesaid Ed Yardeni, the Wall Street veteran who coined the term in the 1980s.
As the Treasury Department auctions off larger amounts of debt to fund the federal government’s ocean of red ink, bond investors may shy away, leading to higher interest rates and higher borrowing costs in key segments of the economy, such as mortgage rates.
“The bond vigilantes may also vote against Washington, assuming that no matter which party wins the White House and Congress, fiscal policy will inflate the federal government’s already bloated budget deficit and fuel inflation,” wrote Yardeni and his colleague Eric Wallerstein last month . “The next administration will face over $1 trillion in net interest expenses on the exploding federal debt.”
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