Election week: Trump wins, S&P +4.7%, small caps lead

The 2024 US presidential election week produced a clearer-than-expected outcome by Wednesday morning and the most decisive post-election rally since 2016. Donald Trump won 312 electoral votes to Kamala Harris's 226, with Republican control of the Senate and narrow House majority. The speed of the resolution (versus the contested-election tail risk markets had priced) unwound significant risk premium.

The session-by-session progression was instructive. Tuesday closed up 1.1% on the expectation of a clean result. Overnight futures rallied 2%. Wednesday opened up 2.5%, closing at +2.5% on the day, led by small caps (IWM +5.8%), regional banks (KRE +13.5%), and Bitcoin (through $75,000). Thursday's FOMC cut (25 bp, unanimous) provided additional tailwind. The week closed with the S&P 500 up 4.66% to 599, its best week of 2024 to that point.

Cross-asset moves reflected the policy regime change. The 10Y yield rose 13 bps to 4.30% on fiscal deficit expectations. The dollar strengthened modestly (DXY +1.4%). Gold fell 1.9% on risk-off premium unwinding. Sector rotation was pronounced: financials (+8.5%), industrials (+6%), and consumer discretionary (+6.2%) outperformed, while utilities lagged (+2.1%). The week established the Trump Term 2 market regime that would persist until the April 2025 Liberation Day shock reset priors.