By Lisa Pauline Matakal and Anika Biswas
(Reuters) – Wall Street stocks jumped in positive trading on Monday, as presidential candidate Donald Trump’s chances of winning a second term increased after surviving an assassination attempt, while hopes of lower interest rates also helped market sentiment.
Under Trump, markets expect a tougher trade policy and looser regulations on issues ranging from energy policy to cryptocurrencies.
Both the US stock index and the Dow Jones hit record highs during the day, while Treasury yields rose, as investors also expect Trump’s policies to increase inflationary pressures and government debt.
Online betting site PredictIt showed bets on Trump winning the election at 67 cents, after an assassination attempt at his rally on Saturday, up from 60 cents on Friday, with Joe Biden winning at 26 cents.
“The narrative for today is based on a ‘Trump trade’ with many investors assuming that weekend events contribute to the former president’s re-election,” said Bob Savage, head of markets strategy and insights at BNY Mellon.
Trump-linked stocks rose, with Trump Media and Technology Group up 26.8%, while software company Fonware and video-sharing platform Rumble rose 4.6% and 5.4%, respectively.
Cryptocurrency stocks also jumped as bitcoin hit a two-week high. Coinbase (NASDAQ:) Global, Marathon Digital (NASDAQ:) and Riot Platforms (NASDAQ:) rose between 8.9% and 10.9%.
Other stocks expected to benefit from a second Trump term rose, with gunmaker Smith & Wesson and prison operator GEO Group rising 11.9% and 10.5%, respectively.
Continued hopes of a rate cut by the Federal Reserve also kept traders optimistic. Investors have priced in an 88% chance of a 25 basis point rate cut by September and two cuts in 2024, according to London Stock Exchange data.
Comments from Federal Reserve Chair Jerome Powell and San Francisco Fed President Mary Daly will be closely watched for their assessment of last week’s inflation data.
Small-cap stocks rose 2.2% to their highest level since January 2022, continuing evidence of broad-based market gains.
As the quarterly earnings season heats up this week, it remains to be seen whether large-cap companies can justify their high valuations and whether lagging market sectors can continue to build on gains.
Ben McMillan, chief investment officer at IDX Advisors, said that in the short term, the shift from tech giants to smaller companies looks set to continue, but to sustain that expansion, we will need to see good earnings numbers.
At 12:01 a.m. ET, the S&P 500 was up 40.53 points, or 0.72%, at 5,655.88, and the S&P 500 was up 163.54 points, or 0.89%, at 18,561.98.
The S&P 500 index of financial stocks rose 1.5%, with Goldman Sachs hitting an all-time high after second-quarter earnings more than doubled.
Macy’s (NYSE:) shares fell 12.9% after the company ended acquisition discussions with Arkhouse Management and Brigade Capital.
Advancing issues outperformed declining issues by a 1.93-to-1 ratio on the NYSE and by a 1.91-to-1 ratio on the Nasdaq.
The S&P recorded 56 new 52-week highs and one new low, while the Nasdaq recorded 179 new highs and 26 new lows.