Stanimir Stoyanov
January
The results of the U.S. election in November 2024 have rippled across the country and the world. The election of Donald Trump has been received with both horror and joy across different fields of society. When it comes to the economy and the stock market, the implications of the election are undeniable. The day Trump was elected, the stock market saw unprecedented gains. This reignited debates about Trump's aggressive political presence and its impact on global markets. As can be seen with the way Trump’s 2024 bid shaped financial speculation, market trends are deeply intertwined with political realities.
Trump’s history with the Stock Market
Trump’s first term in office emanated mixed yet extreme feelings from investors. His corporate tax cuts and deregulatory agendas were simply manna for Wall Street, which reciprocated with record-breaking market highs. The Dow Jones Industrial Average soared by nearly 60% during his first presidency, with much of this growth being attributed to Trump’s pro-business rhetoric and investor-friendly policies. Still, it wasn’t all smooth sailing. Tenuous trade relations with China introduced new uncertainties with material shortages across industries. Dips in the market became commonplace where tariffs were announced, then paused, and then escalated again.
Trump’s practice of using Twitter (now X) to openly express his ideas and opinions has led to an unpredictable environment due to the high level of influence his words hold. A single tweet by him could lead to a company’s stock tanking or rallying. While Trump’s first term echoed the bullish market sentiment, investors and the market also have had to deal with many uncertainties during his office. With Trump’s second term having commenced in January 2025, the market is now preparing for a second round of turbulence, while simultaneously showing enthusiasm as seen on the day of the election.
The November 2024 Fallout
With the 2024 election approaching, the stock market entered a period of heightened volatility. Historically markets have indicated voter attitudes in this case, some predicted a political shift due to economic instability. Prior to the election, polls showcased a very tight race, with most declaring Harris as the candidate likely to emerge from the race victorious. However, online betting sites such as Polymarket saw people betting a total of more than two billion dollars, with Trump’s odds of winning being much higher than those of his opponent, Kamala Harris. This showed that people were ready to bet their money on Trump even if the data signaled against him. As votes were being counted and Trump’s victory became imminent, the stock market began to move rapidly. Nov. 6 saw the market indicators making record gains, with the Dow Jones Industrial Average rocketing 3.6%, the S&P 500 up 2.5%, while the Nasdaq climbed nearly 3%. U.S bank shares were also on the rise, and the US dollar rose to its highest value since 2020.
Still, this initial growth did not prove sustainable, with markets stabilizing around the end of November and even experiencing some losses at the end of the year. In December 2024, Jerome Powell, Head of the US Federal Reserve, stated that they expect inflation to continue rising in 2025, leading to negative reactions from the market. This act and its after-effects acted as a clear questioning of Trump’s actual influence over the market. The president-elect expressed his opposition to the Federal Reserve, raising concerns about future clashes between the two institutions and undermining Trump’s effective power over the U.S. economy.
So, who was the real winner?
Trump’s 2024 campaign saw him working closely with influential businessmen such as the richest person in the world, Elon Musk. Gathering increased public exposure and support in large part due to the popularity and social media influence Musk holds, Donald Trump began shaping his campaign around the billionaire and his companies. This led Musk and his companies to make a huge profit following the election. Even though Trump’s policies suggest fewer incentives for the electric vehicle market, Musk’s Tesla Corporation saw a rise of 15% right after the election.
Trump’s personal net worth also experienced a substantial increase with his company Trump Media and Technology Group, seeing an initial 30% gain, which later fell to an overall gain of 6%, increasing Trump’s personal stake by around 290 million dollars.
Probably the biggest market change following Trump’s win was seen in the cryptocurrency world. Bitcoin immediately surged to an all-time high on the day of the election and then in the following weeks reached over 100,000 dollars, after which it stabilized a bit above 90,000. Ethereum and other altcoins also saw double-digit gains. There might be various factors contributing to this, many of which are connected to Trump. Firstly, analysts believe people prefer decentralized assets amidst political uncertainty. At the same time, Trump’s campaign can be described as a fruitful romance with cryptocurrency. The president-elect has expressed his passion for crypto and has stated that he wants to make the US the “crypto capital of the planet,” pledging an increase of governmental cryptocurrency funds. Additionally, he has promised his campaign supporters Elon Musk and Vivek Ramaswamy the creation of a so-called Department of Government Efficiency (DOGE), in which they will have a role in improving the government's handling of funds.
Why should the world care?
Being the second-largest economy in the world and a leading player in global finance, the United States and its economy have implications in many aspects of social, political and financial life outside its borders too. The day of Trump’s election had effects on markets outside the U.S.; European stocks fell almost proportionally at the rate that U.S. stocks were rising. At the same time, European defense companies saw massive gains, marking both a shift from U.S. military reliance and echoing Trump’s stern stance on Europeans needing to increase military spending.
Trump’s Middle East policies and his incentivization of the U.S. domestic oil industry have resulted in oil prices across the world taking a loss, while natural gas prices have spiked. Trump’s aggressive foreign policy and protective attitude towards the U.S. economy have led to increasing fears about possible material shortages in some industries that rely on imports from countries like China.
Many things remain unknown concerning Trump's second term, but the only thing certain is that it will not be a mundane one. Amid this pressing backdrop, U.S. markets must brace for a period of both market-oriented policies and uncertainty. From what can be seen, crypto investors and stock market enthusiasts are both enthusiastic and cautious. It is up to us as individuals to decide whether or not we want to capitalize on the changing market, but if we do, it is clear that we should not only follow financial data but also closely monitor the actions of one man named Donald Trump.
Photo credits: Gage Skidmore and James Smith on Wikimedia.