Trump’s remarkable sweep to victory sent stock market futures down by as much as 800 points overnight while the Mexican peso suffered some of its worst ever losses and gold and the Japanese yen soared as investors rushed to safety.

But as the initial shock wore off, futures began to recover as Wall Street began to look for positives in Trump presidency including on infrastructure spending and potential individual and corporate tax relief. Trump’s low-key victory speech early Wednesday morning also served to calm markets somewhat.

Still, investors now expect a period of intense volatility given the emotional nature of the 2016 campaign and the blank slate that a Trump win and complete GOP control of Congress present.

“My overriding take from the Trump victory is that he has made uncertainty great again,” said Douglas Kass, founder and president at Seabreeze Partners. “We are going to see intra-day volatility for the next couple of weeks and maybe even longer because there is so much uncertainty about his policies and the degree of cooperation he will get from Congress. His leadership skills and ability to appoint high-quality people are also totally unknown. This is going to be a very emotional time.”

As of 11:30 a.m., the Dow, S&P 500 and Nasdaq stock market indices were all slightly higher. Action in the Treasury market suggested uncertainty over the short-term outlook as yields on short-term debt dropped while longer-term yields rose. This appeared to suggest that investors believe Trump will pursue a spending agenda on infrastructure and tax cuts that will require more government borrowing.

Investors also looked for positives in the stocks of banks and biotechnology companies that might have suffered under a stricter regulatory regime under a potential Clinton presidency.

But investors suggested any kind of Trump rally on Wall Street will likely have to wait until more is known about how he will govern. “Investors don’t like uncertainty and Trump’s presidency embodies uncertainty,” BMO Private Bank’s Jack Ablin wrote in a note to clients. “Emotions will dominate market action over the next several trading days, potentially leading to exaggerated market swings. Foreign markets, particularly China, Japan and Mexico will bear the brunt of investor angst.”

Market strategists also suggested that Trump’s win could cause the Federal Reserve -- widely expected to raise interest rates in December as wages rise and unemployment falls -- to rethink its policy position.

“While the Fed is independent and therefore does not consider political developments in its rate decisions, it does consider the economic implications of political developments,” Manulife Asset Management’s Megan Greene wrote in a note on Wednesday. “Given the high degree of policy uncertainty and the heightened probability of a US recession under a Trump presidency, we expect the Fed will not hike rates this year.”



The initial losses on Wall Street following Trump’s win came after a big rally Monday as polls appeared to suggest Clinton would cruise to victory. The panic selling initially resembled reaction to the Brexit vote over the summer when the UK shocked pundits by choosing to leave the European Union. As with Brexit, most on Wall Street underestimated the degree to which voters angry with elites and the status quo would take a risk on a candidate that exit polls showed most voters viewed as far less prepared for the White House than Clinton.

That left investors badly exposed to the shocking election result. “Investors got caught on the wrong foot as the Orange Swan appeared,” said Kass, referring to Trump’s signature hair color and the “Black Swan” theory of markets in which widely unexpected events shatter people’s view of the world.

