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All three major indexes hit record highs

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Trump-linked stocks, Tesla jump

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Market volatility gauge falls sharply

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Shares of small-cap companies soar

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Indexes up: Dow 3.43%, S&P 500 2.39%, Nasdaq 2.78%

(Updates to mid-afternoon)

By Chuck Mikolajczak

NEW YORK, Nov 6 (Reuters) -

U.S. stocks soared to record highs on Wednesday after

Republican Donald Trump won the 2024 U.S. presidential election

in a stunning comeback four years after he was voted out of the

White House.

The Dow Industrials, S&P 500 and Nasdaq Composite all hit

record highs with investors expecting lower taxes, deregulation

and a U.S. president who is not shy to weigh in on everything

from the stock market to the dollar, although fresh tariffs

could bring challenges in the form of a higher deficit and

inflation.

The Republican's win powered a rally in so-called "Trump

trades," sending U.S. Treasury yields sharply higher. Bitcoin

hit a record high of over $75,000 and the dollar

was on track for its biggest one-day percentage gain since

September 2022.

Polls indicated a very tight race, with some concern the

process could be drawn out before a victor was declared.

"The fact that we got a clean result, there's not going to

be any messy contesting or court cases or whatever it might have

been, is a relief to markets," said Ross Mayfield, investment

strategy analyst at Baird in Louisville, Kentucky.

"So that's kind of like super-charging the classic Trump

trade that we saw in 2016 as well."

The Dow Jones Industrial Average rose 1,450.11

points, or 3.43%, to 43,671.12, the S&P 500 advanced

138.27 points, or 2.39%, to 5,920.87 and the Nasdaq Composite

gained 514.26 points, or 2.78%, at 18,953.43.

Both the Dow and S&P 500 were on track for their biggest

one-day percentage gains since November 2022, with the Nasdaq

poised for its biggest daily climb since August.

Financials, up nearly 6%, were the best

performing of the 11 major S&P 500 sectors. Banks, expected to

benefit from loosening regulations under Trump, powered the

gains, with the S&P 500 bank index up about 10%, its

biggest daily jump in two years.

The small-cap Russell 2000 rallied more than 5% to a

three-year high, with the domestically concentrated stocks seen

as likely to benefit from easier regulations, lower taxes and

less exposure to import tariffs. However, rising Treasury yields

could hurt smaller companies, which tend to rely heavily on

borrowing and are more sensitive to higher interest rates.

The CBOE Volatility Index, also known as Wall

Street's "Fear Gauge," dropped more than 4 points to 16.37 after

touching a six-week low of 15.44.

The rate-sensitive real estate and utilities

sectors were among the day's few decliners as

investors assessed the chances of Trump's policies boosting

inflation and altering the Federal Reserve's path of interest

rates, which has been a key component of Wall Street's recent

rally.

The central bank is widely expected to ease the benchmark

interest rate by 25 basis points at its policy-setting meeting

ending on Thursday. However, traders have begun to trim bets for

a cut in December and the number of reductions expected next

year, according to CME's FedWatch Tool.

Stocks viewed as likely to perform well under a second Trump

term also advanced, with Trump Media & Technology Group ( DJT )

up about 3% while Tesla leapt about 14% as CEO Elon

Musk has supported Trump in his electoral campaign.

Strong gains were also made by shares of cryptocurrency

companies, energy firms and prison operators, while renewable

energy shares fell.

Markets were also eyeing whether the Republican Party could

maintain a majority in the House of Representatives after

gaining control of the U.S. Senate, which would lead to less

opposition to a Trump agenda.