Summary

Financial markets took off in a whirlwind rally following Donald Trump’s presidential victory, despite lingering concerns about his aggressive plans for tariffs, tax cuts, and mass deportations. Now, a week later, the initial surge has started to level off. The three major U.S. stock indexes pulled back on Tuesday after climbing nearly 5% since the day before the election. Here’s a look at the sectors and companies that have come out on top so far—and what investors might expect in the months ahead.

Tesla: Big Bets on a Musk-Trump Alliance

Tesla’s stock skyrocketed over 35% since November 4, reclaiming a market value above $1 trillion for the first time since 2022. Investors are banking on a potential reduction in regulatory pressures on Tesla, especially on safety probes into features like self-driving. Trump’s alliance with Elon Musk could also ease any challenges Tesla faces with U.S.-China relations, critical to its global expansion. While Trump may cut federal support for electric vehicles, analysts say this could actually bolster Tesla’s competitive edge by making it harder for rivals to close the gap.

Cryptocurrency: Betting Big on a New Era

Bitcoin has surged more than 25% to break new records, briefly surpassing $89,000, as Trump’s victory ignites hopes of a friendlier environment for cryptocurrency. Investors believe the era of tough crypto regulations could end, especially since Trump, who once derided crypto, now vows to make the U.S. the “crypto capital of the planet.” He has even proposed creating a national Bitcoin reserve and ousting SEC chair Gary Gensler, who has led a regulatory crackdown on crypto firms. Congress could also become more crypto-friendly, bringing a long-awaited regulatory overhaul closer to reality.

Big Banks: Bracing for Lighter Regulation

Shares in major banks have soared since the election, as Trump’s victory fuels expectations for relaxed financial regulations. Trump is expected to steer decisions on rules that dictate how much capital banks must keep in reserve. He may also remove FTC head Lina Khan, known for her tough stance on monopolies, which has stifled some big bank deals. Banks like Capital One and Discover, which are eyeing mergers, saw their stock climb over 15% on optimism for a smoother regulatory path ahead.

Private Prisons: Positioned for Growth

Shares in private prison giants GEO Group and CoreCivic have spiked nearly 70% since November 4. The spike reflects anticipation that Trump will revive business for these companies, especially as he prepares to implement tough immigration policies that could drive demand for detention facilities. Biden’s administration had cut federal contracts with private prisons, but Trump’s promises to ramp up deportations suggest that policy could soon be reversed.

The Dollar: Soaring on Rate Hike Bets

The dollar index hit its highest level since April, climbing over 2% in the past week. This surge benefits American tourists abroad but sends a mixed signal for the U.S. economy. The dollar’s strength partly hinges on expectations that Trump’s tax cuts, reduced immigration, and potential trade barriers could keep inflationary pressures high, leading the Federal Reserve to maintain elevated interest rates longer than previously expected.

With Trump’s policies taking shape, the market rally’s trajectory remains uncertain. Investors are left to weigh a mix of pro-business promises and uncharted economic shifts in what could be a volatile but potentially lucrative term ahead.