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The Dow racked up strong gains, notching a record high and its best day since 2022 on Wednesday as Donald Trump was elected the 47th President of the United States, stoking optimism that his policies could spur further economic growth.

At 4.00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average surged 1508 points, or 3.6% to close at a record high of 43,729.93. The S&P 500 index closed 2.5% higher and the NASDAQ Composite climbed 2.9%, with both indexes closing at record highs.

Trump wins White House; Red sweep likely

The Associated Press and other major news networks have declared Trump the winner of the 2024 presidential election, confirming his return to the White House.

Meanwhile, the Republicans have taken a majority in the Senate, the upper chamber of the US Congress, and were also on track to win the House of Representatives, raising the possibility of a Republican sweep in the 2024 elections.

"The big question for markets now is whether Trump’s win will bring full Republican control or a split government. If Republicans take both chambers, Trump could have more room to cut corporate taxes—a potential boost for investor confidence," said Russell Shor, Senior Market Specialist at Tradu.

Republican control of Congress—the so-called "red sweep"—presents a much easier path for Trump to enact major policy changes that some expect will likely continue to support the current bull market.

"In our base case, we expect the S&P 500 to rise to 6,600 by the end of 2025, a near-15% price return from current levels, driven by our expectations of benign US growth, lower interest rates, and the continued structural tailwind from AI," UBS said in a Wednesday note.

Trump is widely expected to enact more inflationary policies, given his largely protectionist stances on immigration and trade.

The dollar and Treasury yields shot up on this notion, with the greenback hitting a near four-month high.

'Trump trades' prosper, vulnerable renewables sag

Individual stocks closely associated with the Trump campaign also benefited strongly Wednesday.

Trump Media & Technology (NASDAQ:DJT), which owns the Truth Social platform and is primarily owned by Donald Trump, soared 6%.

Tesla (NASDAQ:TSLA) stock climbed more than 14%, with the electric vehicle giant viewed as a key beneficiary of a Trump win, as CEO Elon Musk was a major backer of the former president’s campaign.

Citigroup (NYSE:C), Bank of America (NYSE:BAC), and Wells Fargo (NYSE:WFC) all rose strongly as investors wagered that the new Trump presidency would result in less regulation in the banking sector.

Coinbase Global (NASDAQ:COIN) stock rose 30%, with the cryptocurrency exchange helped by bitcoin climbing to a record high as Trump has positioned himself as pro-cryptocurrency.

On the flip side, First Solar (NASDAQ:FSLR) stock fell 10%, falling along with other renewable energy firms, with Trump expected to roll back many of the climate regulations passed under President Joe Biden.

Fed meeting in spotlight

The central bank is widely expected to cut interest rates by 25 basis points at the conclusion of a two-day meeting on Thursday.

Any signaling on the Fed’s plan for future rate cuts will be closely watched, given recent signs of stickiness in U.S. inflation. The central bank has signaled a largely data-driven approach to future easing.

(Peter Nurse, Ambar Warrick contributed to this article.)