From banks to small-caps, Trump win sparks big rally in stocks
Legacy automakers rise, smaller EVs drop
Prison operators soar, steel stocks climb
China ADRs, US renewable stocks fall
Adds chart and updates prices
By Medha Singh
Nov 6 (Reuters) - Donald Trump's U.S. presidential election victory boosted the stock market on Wednesday as investors bet on lower corporate taxes and deregulation, lifting shares of Tesla TSLA.O,banks, small-cap companies and Trump's own media company.
His promise to make Tesla CEO Elon Musk head of a government efficiency commission after the billionaire backed Trump throughout his electoral campaign sparked a 15% surge in shares of the electric automaker.
Wall Street's main indexes jumped to record highs, with the Dow Jones industrial average .DJI rallying almost 4% and the S&P 500 .SPX more than 2% higher. The small-cap Russell 2000 index .RUT jumped almost 6% to its highest in nearly three years.
"Business animal spirits could be rekindled once again from Trump's pro-business approach, which could lead to a more robust capital expenditures and investment environment," said Jeff Schulze, market strategist at ClearBridge Investments.
Trump Media & Technology Group, majority-owned by Trump, jumped 6%. The company late on Tuesday reported quarterly results that showed the Truth Social parent's revenue was just $1 million.
The stock has more than tripled in value from its lows in late September, valuing Trump's stake at over $4 billion.
POLICY DETAILS AWAITED
Trump's Republican Party also secured the Senate and was making gains in the House of Representatives, potentially making it easier for the president to legislate his proposals and push through key appointments.
Markets "have priced in a pretty strong mandate for the Republicans and are biasing toward most of the Trump trades," said Scott Chronert, U.S. equity strategist at Citi.
"The market focus seems to be putting more emphasis on deregulation, tax cuts and a more business-friendly backdrop."
Wall Street lenders JPMorgan Chase JPM.N, Bank of America BAC.N and Goldman Sachs GS.N jumped between 8% and 13% on prospects of looser regulations and more deals.
"There is an expectation that the regulatory landscape will ease under the Trump administration" and that is helping financials' shares, said David Ellison, portfolio manager at Hennessy Funds, which holds several bank stocks.
Investors will also be anxious to see how Basel III, a set of global banking regulations, will be implemented by the next administration, said Greg Hertrich, head of U.S. depository strategies at Nomura.
The latest version of the proposal called for a 9% rise in banks' capital. "Whether the banks will need 9%, 6%, 4% or 0% more capital creates very different scenarios," he said.
Hertrich also noted that the proposal could speed up U.S. bank mergers.
Semiconductor stocks advanced, with the PHLX chip index .SOX rallying 3.1% and artificial intelligence darling Nvidia NVDA.O gaining 4% to a record high close.
Trump has proposed tariffs on imported chips, particularly from Taiwan's TSMC, whose U.S.-listed shares TSM.N dropped 1.3%.
The S&P 500 energy index .SPNY climbed 3.5%, while U.S. renewable energy companies NextEra Energy NEE.N and First Solar FSLR.O fell 5% and 10%, respectively.
Trump's campaign laid out an energy policy platform centered around maximizing U.S. fuel and power output, in part by dismantling the Biden administration's efforts to fight climate change.
"I think it will be a positive administration for fossil fuel companies, with less regulation restricting production," said Ronald Temple, chief market strategist at Lazard.
AUTOS, CRYPTO AND CHINA
While Tesla shares surged, stocks of other electric automakers dipped as Trump had said he would consider ending a $7,500 tax credit for EV purchases.
Rivian Automotive RIVN.O dropped 8% and Nikola NKLA.O slipped almost 3%.
Fears of escalation in Sino-U.S. tensions pressured U.S.-listed China shares with iShares MSCI China ETF MCHI.O dropping 2.7%.
Import duties, including a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, are a key plank of Trump's policies and likely to have the biggest global impact.
Victory for Trump, who has positioned himself as pro-cryptocurrency, lifted bitcoin to a record high. Crypto-linked stocks Coinbase COIN.O, MicroStrategy MSTR.O, Riot Platforms RIOT.O, MARA Holdings MARA.O jumped.
Shares of private prison operators Geo Group GEO.N and CoreCivic CXW.N hit their highest levels since 2019. Geo surged 42% and CoreCivic jumped 29% as Trump's promised crackdown on illegal immigration could boost demand for detention centers.
U.S. steel makers Cleveland-Cliffs CLF.N, Steel Dynamics STLD.O and Nucor NUE.N surged, with analysts having noted in the run-up to the election that a Trump presidency may mean rising protections for the domestic steel industry.
Retailers' shares fell on concerns over possible tariff proposals.
Shares of Wayfair W.N dropped almost 9%, while Home Depot HD.N and Lowe's LOW.N each fell nearly 3%.
For the U.S. stock market report click here
For U.S. stocks on the move click here
For story on the likely impact of Trump win on global economy click here.
Investors position for a Trump win https://reut.rs/4hufcl7
Return of the Trump trade https://reut.rs/3AH20bL
Reporting by Medha Singh in Bengaluru; Additional reporting by Caroline Valetkevitch and Tatiana Bautzer in New York, Noel Randewich in Oakland, California, and Aishwarya Venugopal, Zaheer Kachwala, Nathan Gomes, Nupur Anand and Savyata Mishra; Editing by Arun Koyyur, Richard Chang and Lisa Shumaker
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