Trump's victory ignites a rotation frenzy in the U.S. stock market: bank stocks soar, indices rise over 10%, energy stocks surge, while solar stocks collapse

In this week's U.S. election, Trump sweeps swing states to secure victory, and the Republican Party he represents has also secured a majority in the Senate, currently leading the Democrats in the House of Representatives elections. Following Trump's victory, not only did the U.S. stock market rise, but it also ignited a rotation frenzy within the market. Investors flocked to bank stocks and traditional energy stocks, while renewable energy substitutes—solar stocks—were heavily sold off.

Stocks benefiting from the theme of financial deregulation became big winners on Wednesday, while renewable energy and high tariff risk stocks emerged as the biggest losers.

On Wednesday, November 6, the overall banking sector indicator, the KBW Bank Index (BKX), rose by 10.7%, reaching its highest level since February 2022. The KBW Nasdaq Regional Banking Index (KRX) and the SPDR S&P Regional Banking ETF (KRE) rose by 13.5% and 13.4%, respectively, hitting their highest levels since January and August of the same year.

By the close, the financial sector of the S&P 500 rose nearly 6.2%, far outpacing the second-best performing sector, industrials, which rose 3.9%. The financial sector ETF SPDR Financials Sector ETF (XLF), which includes some major banks, rose nearly 6.1%, setting a new historical high; the small-cap index Russell 2000, which includes some regional banks, rose over 5.8%, reaching its highest level since November 2021.

Among the major banks, Goldman Sachs and JPMorgan Chase rose by 13.1% and 11.5%, respectively, leading the Dow Jones components, while Citigroup and Bank of America rose by 8.4%, Wells Fargo rose by 13.1%, and Morgan Stanley rose nearly 11.6%.

The surge in bank stocks reflects investors betting that Trump will fulfill his promises to lower taxes and relax banking regulations.

During his campaign, Trump vowed to reduce the corporate tax rate from 21% to as low as 15%, and for every new rule introduced, he would eliminate 10 old ones. Compared to Harris's plan to raise corporate taxes, Trump would create a more attractive environment for the banking industry. Trump also promised to reform major regulatory agencies and pledged to fire regulators, including SEC Chairman Gary Gensler.

On Wednesday, several oil and gas stocks surged, indicating investors speculate that Trump's presidency will favor fossil fuels. U.S. oil service giant Baker Hughes rose by 10.8%, Schlumberger rose nearly 8%, EQT Resources rose by 7.6%, KMI rose by 6.6%, the only energy component in the Dow, Chevron, rose by 2.8%, Occidental Petroleum rose nearly 2%, and ExxonMobil rose by 1.7% The photovoltaic stocks fell sharply across the board. By the close on Wednesday, Sunrun was down 29.6%, Array fell 21.9%, photovoltaic inverter supplier Enphase Energy dropped 16.8%, and First Solar fell over 10.1%.

The Democratic Party is generally supportive of renewable and green energy, with the Biden administration strongly promoting the electrification of transportation. In contrast, Trump claims he will completely reverse Biden's electric vehicle policies, advocating for the repeal of Biden's electric vehicle mandates and the reduction of expensive and cumbersome regulations; he aims to lift restrictions on U.S. energy production and terminate the socialist Green New Deal.

Trump's victory also boosted Bitcoin, cryptocurrencies, and blockchain concept stocks.

As the results of the U.S. election voting come in from various locations, Trump's lead over Harris becomes increasingly apparent. On Wednesday during Asian trading hours, the price of Bitcoin broke the $75,000 mark for the first time in history, and U.S. stocks briefly surpassed $76,000, setting a new historical high with an intraday increase of about 10%.

At the close of U.S. stocks on Wednesday, the largest cryptocurrency exchange in the U.S., Coinbase, rose 31.1%, Bitcoin holder MicroStrategy increased by 13.2%, Bitcoin mining giant Canaan Creative rose 13%, and cryptocurrency mining companies Riot Platforms, MARA, Bitfarms, and Stronghold Digital Mining rose 26.2%, 19%, 17.7%, and 17.3%, respectively.

华尔街见闻 mentioned that during his campaign, Trump repeatedly sought votes from the cryptocurrency community, stating that he would make the U.S. the first country to classify Bitcoin as a strategic reserve asset and turn the U.S. into the "global cryptocurrency capital," firing the SEC chairman who is seen as hostile to the cryptocurrency industry and encouraging power plants to strengthen electricity supply for Bitcoin mining