US stocks surged on Wednesday, with the Dow jumping 1,500 points – its first single-day gain of over 1,000 points since November 2022. “Trump trades” surged across the board, led by Tesla, which jumped nearly 15%. Investors are closely watching the Federal Reserve’s November meeting for potential changes in interest rates.
Following Trump’s victory, the “Trump trade” phenomenon gained momentum worldwide. The US stock market saw major indexes set new records, with the small-cap Russell 2000 Index – a beneficiary of Trump’s policies – also rising sharply. Top sectors included tech giants, banking, private equity, mortgage lending, and the oil and gas sector.
Top Stock Performers
Tesla emerged as a standout winner, surging nearly 15% to its highest level since July 2023. Musk, backed by Trump’s policy alignment, saw his net worth skyrocket by around $20 billion overnight. Garrett Nelson, a senior analyst at CFRA Research, raised Tesla’s target price from $265 to $375, forecasting an additional 30% growth potential for the stock.
In contrast, Harris-aligned sectors – including renewable energy, European auto, and shipping – faced declines. Sunrun dropped nearly 30%, Array fell around 22%, Enphase Energy lost over 16%, and First Solar declined 10%.
David Bahnsen, CIO of Bahnsen Group, noted investor sentiment now favors growth stocks, deregulation, and pro-market policies. Investors also anticipate increased M&A activity and more tax cuts, creating a strong backdrop for equities.
The Federal Reserve’s path on rate cuts is also a focal point, with Trump’s return possibly shifting expectations. Bank of America Merrill Lynch suggests fiscal expansion under Trump may push the Fed to revise its neutral rate outlook. Additionally, heightened tariffs could prompt the Fed to pause cuts to mitigate potential inflation and growth impacts. The Fed’s November policy announcement is scheduled for Thursday.
US Stocks
Fundamental Analysis:
Trump-affiliated stocks rose, with Trump Media Technology Group up nearly 6%, and Tesla spiking nearly 14% to a high not seen since July 2023. Major tech stocks followed suit: Intel jumped over 7%, Nvidia and Google rose about 4%, Amazon climbed more than 3%, and Netflix and Microsoft advanced over 2%, though Apple and Meta had modest declines. Nvidia, Amazon, and Netflix all reached record highs. The Philadelphia Bank Index gained over 10%, with Goldman Sachs and Wells Fargo each up over 13%, while JPMorgan Chase and Morgan Stanley rose more than 11%, and Citigroup and Bank of America climbed over 8%.
In earnings news, Qualcomm shares rose over 10% post-market after its Q4 revenue exceeded expectations. The company also approved a new $15 billion stock buyback plan. ARM, however, fell more than 5% in after-hours trading as its Q4 revenue missed projections.
The Nasdaq Golden Dragon China Index fell 1.83%, with most popular Chinese stocks declining. Nio dropped over 5%, Bilibili lost more than 4%, XPeng was down nearly 4%, and JD.com and Li Auto both fell more than 3%.
Technical Analysis:
Market Trends:
- Dow Jones: +1,508.05 points, +3.57%, closing at 43,729.93
- Nasdaq: +544.29 points, +2.95%, closing at 18,983.47
- S&P 500: +146.28 points, +2.53%, closing at 5,929.04
Hong Kong Stock Market
Fundamental Analysis:
Hong Kong’s three main indexes opened low but climbed higher. Tech stocks surged with Meituan up over 3%, and Xiaomi, NetEase, and Baidu each up about 1%. Real estate stocks rebounded strongly, with Jinke Holdings jumping 39% and Shimao Group up more than 33%. Following new policies in the consumer sector from the Ministry of Commerce, restaurant stocks saw significant gains, with Jiumaojiu rising over 11%, and beer stocks also strengthening, with China Resources Beer up more than 6%.
Gold stocks fell as Zijin Mining declined nearly 3%, following news that Trump’s victory spurred a reevaluation of the dollar. With expectations that Trump’s economic and tariff policies could strengthen the dollar, this impacted gold prices, which typically have an inverse relationship with the dollar.
Technical Analysis:
- Hang Seng Index: +1.16%, closing at 20,776.00
- Hang Seng Tech Index: +0.99%, closing at 4,619.57
- Hang Seng China Enterprises Index: +1.50%, closing at 7,474.14
FTSE China A50 Index
Fundamental Analysis:
China’s three main indexes rose from a morning dip to close higher, with midday total market turnover reaching ¥1.53 trillion, down ¥202.9 billion from the previous day. Over 4,000 stocks saw gains.
Top sectors included liquor, food manufacturing, retail, and real estate. Liquor stocks led the charge, with Jiugui Liquor, Shunxin Agriculture, and Shuijingfang hitting limit-up. The food sector saw a wave of limit-ups across stocks like Gai Shi Foods and West Wang Foods. Retail stocks also performed well, with Dalian Friendship and Chongqing Department Store hitting limit-up. Real estate stocks rebounded, with Huaxia Happiness achieving nine consecutive limit-ups.
Meanwhile, defense stocks posted losses, with AVIC Shenfei nearing limit-down, joined by losses in Zhongguo UAV and Xinyu Guok. High-valued stocks adjusted downward, including Chuankefa Dragon Manganese and Sichuan Changhong.
Technical Analysis:
Market Trends:
- Shanghai Composite Index: +0.88%, closing at 3,413.47
- Shenzhen Component Index: +0.44%, closing at 11,016.18
- ChiNext Index: +0.82%, closing at 2,284.52
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