What does this mean?

In the world’s biggest financial market, there are bigger factors at play than red versus blue in the race for the White House: strong corporate earnings, lower interest rates, and the ever-evolving nature of AI. In some cases, analysts have been treating the election results like a “clearing event” – a force that wipes uncertainty and lets investors get back to business.

Volatility has been on an upswing in recent days, but it’s expected to fall as investors turn their focus away from the White House and back to the Federal Reserve: the central bank’s expected to cut interest rates again this week.

Market reaction

For markets: In essence, markets woke up Wednesday ready to rally no matter who ended up in the White House. Stocks, bitcoin, the greenback, and bond yields all saw big jumps, as investors bet on the president-elect’s talk about tax cuts and deregulation. But some of those trades might not last.

While there may be short-term gains to be made, people could start selling soon to lock in profits – especially with rising bond yields hinting that inflation could be a concern again.

The big picture: Election years can have a lot of turmoil – but markets mostly brush that stuff off. History shows that US stocks find their groove no matter who’s sitting in the Oval office. It is worth bearing in mind that campaign promises don’t usually shape markets over time. Ultimately, broader economic trends – not voting booth wins or losses – drive investments.