In the aftermath of Donald Trump’s re-election, U.S. stock markets have seen notable shifts, with certain sectors surging and others experiencing mixed results. Monday saw the S&P 500 inch up by 0.1%, continuing its best week of the year following Trump’s victory and an interest rate cut by the Federal Reserve to support economic growth. The Dow Jones Industrial Average rose by 304 points, or 0.7%, while the Nasdaq composite added 0.1%.

Tesla, under the leadership of Trump ally Elon Musk, played a significant role in lifting the S&P 500, surging by 9.1% on Monday. This jump continued a post-election rally that saw Tesla shares rise nearly 15% after the election. Financial stocks also performed well, with JPMorgan Chase gaining 1% on expectations for economic growth and a more merger-friendly regulatory environment under Trump.

Sector Gains and “Trump Trade” Winners

Stocks that are closely tied to the U.S. economy, such as smaller companies represented by the Russell 2000 index, also saw a boost, rallying by 1.5%. These stocks stand to benefit the most from Trump’s America First policies, which focus on domestic growth rather than multinational gains.

Insurance companies were also in focus as investors speculated on a potential merger between Cigna Group and Humana. Though Cigna clarified it was not actively pursuing the merger, its stock rose 7.3%, while Humana’s stock dropped by 2%.

Tech Stocks Struggle as Valuations Adjust

Conversely, some Big Tech stocks, particularly those heavily invested in artificial intelligence, saw declines. Nvidia, a major player in the tech world, fell 1.6%, reflecting market sentiment that its high valuation may be unsustainable in the current economic climate. With a market value near $3.6 trillion, Nvidia’s movement heavily influences the S&P 500 and Nasdaq indexes.

Crypto Market Rally and Rising Treasury Yields

Bitcoin also made headlines, reaching a historic high of $87,000, as Trump pledged to support cryptocurrency in his vision of the U.S. as a “crypto capital.” Treasury yields have generally been climbing since September, driven by expectations of strong economic growth, increasing U.S. debt, and potential inflation under Trump’s policies. However, bond trading was closed Monday in observance of Veterans Day.

Investor Outlook: Market Valuations and Growth

As the market digests the implications of Trump’s policies, experts advise caution. Mark Hackett, chief of investment research at Nationwide, cautioned that while markets have been rising, valuations are increasingly high, and growth rates may not be sustainable long-term. Investors are closely watching the Fed, which is expected to take a conservative approach to further interest rate cuts, potentially influencing inflation trends.

Overall, the markets have reacted positively, but the volatility highlights that it will take time for policy changes to solidify. Investors are encouraged to remain cautious and avoid knee-jerk reactions as the economic landscape unfolds.