Trump Victory Sends Markets on Rollercoaster Ride

By:
Chris Gaetano
Published Date:
Nov 9, 2016
NYSE_HalfMast

Donald Trump has been elected president of the United States, and the immediate aftermath of his victory has rattled markets worldwide. Marketplace reported that the Dow Jones Industrial Average plunged about 750 points once it became apparent that Trump would win the election, though as of 9:48 a.m. this morning it appears to have, so far, bounced back nearly to previous levels. Similarly, the S&P 500 index dipped 800 points, according to CNBC, before bouncing back this morning. The dollar, too, was subject to a massive and sudden sell-off in the immediate aftermath of a Trump victory, falling nearly 4 percent versus the yen and 2.3 percent against thee Swiss franc, according to Reuters, though Bloomberg reports that the greenback has since regained its losses. The Nasdaq, so far, has not been so lucky though, with the index currently down 30 percent. 

On the other hand, gold, that old standby for when people are feeling anxious about the economy, has surged in price, according to Fortune, with its 4 percent spike being the biggest increase since the U.K. voted to leave the European Union this past summer. Bloomberg reports that one British seller has literally run out of bars and coins of the precious metal. Another traditional bulwark against investor anxiety, U.S. treasury bonds, has also seen a spike in demand, according to Reuters, with the yield on 30-year notes rising to its highest levels in the past nine months, according to Reuters, with buyers anticipating a Trump presidency increasing inflation as he pursues protectionist trade policies. 

Outside the U.S., the Mexican peso, which over the course of this election season has risen and fallen inversely with Trump's success, has tanked 10 percent against the dollar in the wake of the election results, according to Reuters. The election also rocked Asian markets, with nearly every major index down. 

Donald Trump ran on a platform of renegotiating international trade agreements, increasing tariffs on Chinese imports, and cutting taxes across the board. The American Banker released a primer on some of his more specific policies, including means testing for Social Security, letting Americans purchase healthcare along state lines, repealing the Cadillac tax on expensive health plans, eliminating all business tax incentives save the R&D credit, and a one-time repatriation of corporate cash discounted at a 10 percent rate. He also indicated he would support reviving the Glass-Steagall Act, which created strict limits on the relationship between commercial and investment banking. 

Accounting Today said that Trump also intends to reduce the number of tax brackets to three, taxed at 12, 25 and 33 percent, and to lower the business tax rate to 15 percent. He also wants to tax carried interest as ordinary income, repeal the Affordable Care Act and its myriad other tax provisions, get rid of the estate tax entirely, allow for an above-the-line deduction for child care and elder care expenses, expand the EITC, tax the first $2,000 per year of contributions to Dependent Care Savings Accounts. 

UPDATE: As of 4:09 p.m. the Dow has since reversed course to close 250 points higher, and the S&P 500, after initial losses, closed 1 percent higher, according to CNBC. Though the initial swings were reminiscent of the turmoil following the Brexit, CNBC said that traders have since learned from that experience and recovered quickly from the shock. 

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