New York: Stocks on Wall Street hit all-time highs, bond yields jumped and the dollar was set for its best day since 2020, with investors mapping out Donald Trump’s return to the White House and what his policies will mean for markets. The S&P 500 climbed 2%, heading toward its 48th record this year, on bets the newly elected president will enact pro-growth policies that will boost Corporate America. A gauge of small caps rallied 4.6% amid speculation they will benefit from Trump’s protectionist stance, while wagers on lower taxes and reduced regulation lifted banks. Insurers focused on the Medicare market jumped on expectations the government will pay higher rates to companies that provide private versions of the US health program for seniors. Trump Media & Technology Group Corp. gained 6%.

Wall Street’s “fear gauge” – the VIX – tumbled the most since August to around 16. Trading on stocks spiked, with the S&P 500 volume 110% above the average of the past month. The Dow Jones Transportation Average jumped to a fresh high after a three-year drought of records, finally confirming the strength of its industrial counterpart. The breakout is a bullish sign to followers of an investing framework known as Dow Theory that says synchronized gains in both gauges portend better times ahead for the broad market.

Treasury yields climbed across the curve, with the move led by longer-term bonds as traders slashed wagers on the scope of rate cuts by the Federal Reserve.

Investors have doubled down on bets for policies such as tax cuts and tariffs that could trigger price pressures. The moves also signal worries that Trump’s proposals will fuel the budget deficit and spur higher bond supply. “For now, investor sentiment is pro-growth, pro-deregulation, and pro-markets,” said David Bahnsen, chief investment officer at The Bahnsen Group.

“There is also an assumption that M&A activity will pickup and that more tax cuts are coming or the existing ones will be extended. This creates a strong backdrop for stocks.” The dollar rallied against most major currencies, with the euro down 1.9%. The Mexican peso pared its loss to 0.7%. Bitcoin, viewed by many as a so-called Trump trade after he embraced digital assets during his campaign, hit a record high. Commodities came under pressure, with gold and copper tumbling.