Stock markets accept Trump win with only slight decline

Donald Trump on Super Tuesday. (Allen Eyestone/The Palm Beach Post)

Donald Trump on Super Tuesday. (Allen Eyestone/The Palm Beach Post)

Stock markets looked certain to plunge Wednesday in reaction to Donald Trump’s unexpected win. However, the Dow Jones industrials were down just 45 points in opening minutes of trading.

Before U.S. markets opened Wednesday, investors seemed to grow calmer. Overnight, futures markets showed the Dow Jones industrial average plunging 750 points. By 9 a.m. Wednesday, that gap had narrowed to 236 points.

Still, many observers predicted volatility.

“A Trump presidency is an unanticipated — and unwelcome — outcome in the eyes of financial markets, so we’ll see a large and immediate pullback globally and a flight to quality,” said Greg McBride, chief financial analyst at Bankrate.com in Palm Beach Gardens. “Expect a 10 percent to 15 percent stock market pullback over the next few weeks, a sharp drop in long-term interest rates, and the Fed to remain sidelined next month.”

Palm Beach hedge fund manager Doug Kass called Trump’s win a “seismic” change for investors.

“There will be some winners — such as health care, biotech and gold — but likely many more losers than winners emanating from a new Trump administration,” Kass said.

“Expect volatility, but it’s probably not going to be as bad as at first glance,” said Mekael Teshome, an economist at PNC Financial Services Group. “It looks like we’ve already recovered some of those losses. But it’s really hard to say whether it’s going to be a bull market or if we’re going to bumble along.”

Many economists now expect the Federal Reserve not to raise rates in December.

“With much greater economic uncertainty likely in the months ahead, the Federal Open Market Committee could decide to hold off on an increase in the fed funds rate,” said Stuart Hoffman, chief economist at PNC.

It’s unclear how markets will react over the longer term to Trump’s presidency. On the campaign trail, he spoke of cutting corporate income taxes and ending Obamacare, two policies investors would seem to welcome.

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