SOTS 2nd Hour: Markets Rally on Trump Victory 11/6/24

Sara Eisen (0:00)

Good Wednesday morning. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. We're looking at record highs all around, Dow, S&P and Nasdaq, after the extraordinary and historic victory for President Donald Trump. The S&P is soaring 1.7%.

Not every sector is higher. You've got the defensive groups under pressure, Staples, Utilities and Real Estate, but what's leading? Financials. Tech Group soaring 4.5%. Industrials, 2.5%. Energy, the Nasdaq is rallying as well. It's up 1.8%. Tech stocks have joined the party. And it's not just the stock market. And by the way, I wanted to point out Russell 2000, also 52-week highs there, a small cap soaring 4%.

Look at Treasuries right now. We've seen a sell-off with higher yields. This is a continuation of the Trump trade that we have been seeing weeks into the election, especially the 30-year yield. We'll talk about that in just a moment. 4.632. We're looking at highest levels in months here for these Treasuries yields. We're also going to talk about some of the other movers in just a moment, but we're 30 minutes here into the trading session. Here are some stocks we're watching. There's a lot this morning. How about Tesla soaring double digits? More on what's behind that move ahead on the show. Cryptos are rallying, Bitcoin hitting new all-time highs, topping 75,000. We're going to take a closer look at what the Trump victory actually means for the asset class. Then financials, as I mentioned, rallying more than 5% as the Fed kicks off another rate meeting. That's happening. We're going to get a decision tomorrow on that, but also deregulation excitement in the bank area. Today, it's worth just pausing and looking at some of these trades that are reacting to the Trump victory. Also, the flip of the Senate. The S&P 500, we'll just start there. We have seen a steady climb higher all year for the S&P 500 We're now adding to those gains and seeing an almost pretty strong, almost 2% rally right now. If you go into the S&P, how about DJT? That's obviously one place we look for the Trump trade. That's the most direct trade. Heavy volumes on this one, of course.

David Faber (2:02)

Yeah, but not actually, not back to its recent highs, interestingly enough, Sara. I think there are a lot of other places to look this morning in the stock market for the impact.

Sara Eisen (2:11)

How about clean energy stocks versus banks? This has been a sort of trades going in the opposite direction. Clean energy was one of the areas thought to benefit under a Harris administration. That's been weaker lately on the Trump trade and the Trump win. And then the banks, of course, deregulation. Very helpful.

David Faber (2:31)

And an M&A wave, potentially. It's just a lot more activity in general, corporate activity perhaps is benefiting a lot of the banks. We talked about that last hour. These moves are quite significant. I mean, you see double digit moves in some of the biggest banks. And again, to your point, deregulation and solar stocks, for example, under pressure, under significant.

Sara Eisen (2:51)

Jake Clayton, former SEC chair under Trump, was on with us here last night on the set. And when he talked about the deregulation agenda, one thing he mentioned specifically was Bank M&A saying, we have 4,000 regional banks in this country. They need to merge.

We love our regional banks, but that would be good. And he mentioned that as a specific example of what's been held back in terms of activity in the Biden administration, for instance, and something potentially to look forward to. So we'll be watching those regionals, the big ones, too. Look at the kind of day they're having. Other trades in focus, the US dollar. Not very often we see a 2% move in the dollar index, but that's what we're seeing right now. On prospects for stronger growth, potentially higher inflation, tariffs in the US., our trading partners potentially being hurt by those tariffs. Watching dollar Mexico, for instance, where the dollar is strong. How about dollar versus China? This has been a good proxy as well for the election. US dollar versus Chinese yuan. And again, it's unusual to see a 1% move here. The thinking, if China is a big target of Trump's tariffs, as he has promised, that's going to hurt their economy and money flows into the US as a result. 30-year treasury yield. We're digesting this idea of stronger growth prospects, potentially higher inflation and higher deficits. So that's one to watch their highest level since May on the 30-year. Bitcoin is another one. I mean, record highs for Bitcoin. It's been amazing to watch. He, President Trump, during the campaign, said that the United States is going to be the center of the Bitcoin planet. We're off the highs. Sword passed 75,000 earlier, but still up nicely. Just some commentary from Wall Street on what this might all mean and what to do with some of these market moves beyond today. JPMorgan says, getting past the election is a risk on event. As we are now back to underlying fundamentals. After 2016 and 2020 elections, financials and tech were the two sectors that had the largest outperformance. Given the strong macro environment and resilient earnings prints, we may see that pattern continue to hold. Wells Fargo, Trump win is a regulatory game changer that likely includes more free markets, less harsh oversight, aids capital, costs, feeds, and reduces regulatory risk. This should all aid banks, especially the GSIBs. You've been mentioning some of the bigger, you know, systemically important ones. Favorite equals city, according to Wells Fargo. Risk, though, is deficits. And then Bank of America just on the risk of tariffs. We don't expect the Fed to prejudge the Trump policy agenda, but we think it will pause in the cutting cycle if large tariff increases are announced, assuming the economy is still on solid footing. Inflation remains above target, and we think the Fed will err on the side of caution after having incorrectly assumed that 2021 supply shocks would be transitory. Translation, we're still expecting a Fed cut tomorrow. Don't expect Powell to get into the election results or anything like that, but no doubt we'll be watching because blanket tariff policies, and this didn't happen last time in the Trump administration because it wasn't as broad as what he's talking about now, and we'll see if he actually does that, but could have the potential to increase prices for American consumers on inflation, and that's something the Fed obviously has to be attuned to.