Dow Sets New Record Amid Trump Boost and Rate Cut Hopes

The Dow reached a record high as markets reacted to the increased likelihood of Donald Trump winning a second term following an assassination attempt he survived. Positive investor sentiment was also bolstered by hopes for interest rate cuts. Trump's prospective policies could benefit certain stocks and sectors.

The Dow hit a record high in Wall Street's upbeat trading on Monday, fueled by a greater chance of presidential candidate Donald Trump winning a second term after surviving an assassination attempt, while interest-rate cut hopes further buoyed sentiment.

Under Trump, markets anticipate a hawkish trade policy and looser regulations on issues like climate change and cryptocurrency. Online betting site PredictIt showed Trump's election win bets rising to 66 cents from Friday's 60 cents, with Joe Biden's victory odds at 26 cents.

'In a Republican administration, you'll see a lower tax policy, lower regulatory policy... that's typically good for stocks. We're seeing some of that in terms of forward-looking expectations from investors at this point,' said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. Trump-linked stocks soared, with Trump Media & Technology Group, software firm Phunware, and video-sharing platform Rumble jumping between 6% and 32%.

Crypto stocks also surged as bitcoin rose to a two-week high. Coinbase Global, Marathon Digital Holdings, and Riot Platforms advanced between 5.3% and 8.2%. Other stocks expected to benefit from Trump's second term also climbed, with Gunmaker Smith & Wesson and prison operator GEO Group gaining 12.6% and 9.4%, respectively.

The Dow hit a record high, boosted by a 2% gain in UnitedHealth as health insurers rallied on a likely Trump win. The small-cap Russell 2000 gained 1.2% to its highest since January 2022, evidence of broad-based market gains.

Investors priced in an 88% chance of a 25-basis-point rate cut by September and two cuts for 2024, according to LSEG data, despite the Fed's last economic projections indicating only one rate cut this year. Rate cut hopes aided Friday's strong rally, which saw the Dow and S&P 500 touch intraday record highs after cooler-than-expected inflation data, and the Russell 2000 achieve its best week since November.

Comments from Federal Reserve Chairman Jerome Powell and San Francisco Fed President Mary Daly, expected later on Monday, will be scrutinized for their assessment of last week's inflation data. At 9:49 a.m. ET, the Dow Jones Industrial Average was up 201.52 points, or 0.50%, at 40,202.42, the S&P 500 was up 23.67 points, or 0.42%, at 5,639.02, and the Nasdaq Composite was up 93.90 points, or 0.51%, at 18,492.34.

As the quarterly corporate earnings season ramps up this week, it remains to be seen if megacaps can justify their high valuations. Among megacaps, Apple advanced 1.8% to an all-time high after Morgan Stanley added it to its 'top pick' list, while Tesla jumped 4.8%.

The leading sectoral gainer was the S&P 500 tech index. The Financials index also rose 0.8%, with Goldman Sachs hitting a record high after second-quarter profit more than doubled. Macy's shares slumped 15.3% after the company terminated buyout discussions with Arkhouse Management and Brigade Capital.

Advancing issues outnumbered decliners by a 1.42-to-1 ratio on the NYSE and by a 1.59-to-1 ratio on the Nasdaq. The S&P index recorded 31 new 52-week highs and one new low, while the Nasdaq recorded 96 new highs and 15 new lows.

(With inputs from agencies.)