U.S. elections update: Trump wins the White House. Markets react.

Executive summary:

Donald Trump has won the race for the presidency, defeating Vice President Kamala Harris to earn a second term in the White House. The Republican party has also won the Senate, while control of the U.S. House of Representatives remains up for grabs
As the race for control of Congress plays out, we believe investors are best-served to look through any short-term volatility and stay focused on the long-term.
Markets have typically trended up over the long term, regardless of the party in the White House.

Updated Wednesday, Nov. 6 at 8 a.m. Pacific time

The trend toward a Republican wave election outcome that we highlighted last night continues Wednesday morning in the U.S. as more votes are tabulated. Donald Trump has secured a second term in the White House after beating Vice President Kamala Harris in several key swing states. The Republican party has also won control of the Senate, while control of the House of Representatives remains up for grabs.

Equity markets have reacted favorably to the news, with the Dow Jones Industrial Average gaining roughly 3% and the S&P 500 advancing approximately 2% in the hour since trading began on Wall Street. Small cap stocks in particular have soared on expectations of a reflation trade under the incoming Trump administration. Case-in-point: the Russell 2000 Index of small cap stocks is up nearly 4%, with investors betting that smaller, cyclical stocks will benefit from potential tax cuts and a looser regulatory environment.

The reflation trade was also reflected in bond markets, with the yield on the U.S. 10-year Treasury note surging to 4.45% as markets priced in the potential for tariffs on key U.S. trading partners and an uptick in inflation under a second Trump administration.

**** Original post from Nov. 5 follows below ****

Key results

OK, let’s jump right into it. As of 8 p.m. Pacific time on election night:

The race for the White House is still too close to call. As the votes roll in, prediction markets suggest former President Donald Trump may be more likely to win but—just as in 2020 and 2016—we will need to wait for more votes to be counted, particularly in key swing states like Pennsylvania, Michigan, and Wisconsin, before the outcome becomes clear.
While control of Congress is still up for grabs, Republicans appear on track to gain ground in the Senate, with prediction markets suggesting a wave election for the Republican party has become more likely.
The S&P 500 Index is tracking 1.2% higher than Tuesday’s New York close. Meanwhile, Treasury yields are up 17 basis points over the same period.
Expectations for a wave election and a sustained period of expansionary fiscal policy are likely a key factor behind the rise in Treasury yields this evening.
In foreign exchange markets, the greenback strengthened against the Mexican peso and the euro, reflecting a greater likelihood of tariffs being instated against key U.S. trading partners.
The direction and magnitude of moves across asset classes are consistent with our scenario planning leading up to the election. We do not see any extreme dislocations in overnight trading that would warrant a material change to our portfolio strategy.

Elections and investing for the long-term

Empirically, U.S. markets have rewarded investors for looking through election volatility and staying invested for the long-term. And while we’ll always be on the lookout for market dislocations and policy changes into 2025, we think that strategic focus remains key today.