Wall Street set to rise as investors bet on second Trump term

American markets post Trump shooting: US stock indexes were set to open higher on Monday as traders priced in a greater chance of presidential candidate Donald Trump winning a second term after surviving an assassination attempt. Additionally, hopes for a rate cut further boosted sentiment. Under Trump, markets anticipate a hawkish trade policy and looser regulations on issues ranging from climate change to cryptocurrency.

The dollar and some Treasury yields rose on Monday, as investors also expect Trump's policies would increase inflationary pressures and government debt.

Online betting site PredictIt showed bets for a Trump re-election at 67 cents, up from Friday's 60 cents, with a victory for Joe Biden at 28 cents.

"In a Republican administration, you'll see a lower tax policy, lower regulatory policy... that's typically good for stocks. We're seeing some of that in terms of forward-looking expectations from investors at this point," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

Stocks linked to Trump soared in premarket trading. Trump Media & Technology Group (DJT.O) was one of the most actively traded stocks, jumping 47.9 per cent, while software firm Phunware (PHUN.O) and video-sharing platform Rumble (RUM.O) rose 29.3 per cent and 10.3 per cent, respectively.

Cryptocurrency stocks also saw significant gains as bitcoin (BTC=) reached a two-week high. Coinbase Global (COIN.O) gained 4.8 per cent, while Marathon Digital Holdings (MARA.O) and Riot Platforms (RIOT.O) advanced over 6 per cent each.

Other stocks expected to benefit from a potential second term for Trump also climbed, with gunmaker Smith & Wesson (SWBI.O) and prison operator GEO Group (GEO.N) gaining 6.6 per cent and 7.0 per cent, respectively.

Investors priced in nearly 87 per cent odds of a 25-basis-point rate cut by September and two cuts for 2024, according to LSEG data, even though the Fed's last set of economic projections indicated only one rate cut this year.

Rate cut hopes aided Friday's strong rally, which saw the Dow (.DJI) and the S&P 500 (.SPX) touch intraday record highs after cooler-than-expected inflation data, and the Russell 2000 index (.RUT) notch its best week since November. Futures tracking the small-cap index (RTYcv1) were up 0.71 per cent on Monday.

Comments from Federal Reserve Chairman Jerome Powell and San Francisco Fed President Mary Daly, expected later in the day, will be closely watched for their assessment of last week's inflation data.

At 8:50 a.m. ET, Dow e-minis (1YMcv1) were up 206 points, or 0.51 per cent, S&P 500 e-minis (EScv1) were up 20.75 points, or 0.37 per cent, and Nasdaq 100 e-minis (NQcv1) were up 76.25 points, or 0.37 per cent.

As the quarterly corporate earnings season ramps up this week, it remains to be seen if megacap stocks can justify their high valuations.

Goldman Sachs' (GS.N) second-quarter profit more than doubled, with shares rising 0.9 per cent.

BlackRock (BLK.N) edged up 0.1 per cent after the world's largest money manager's assets hit a record high and profit grew 9 per cent in the second quarter.

Apple (AAPL.O) advanced 2.0 per cent after Morgan Stanley added the iPhone maker's stock to its "top pick" list, while Tesla (TSLA.O) jumped 4 per cent.

Macy's shares (M.N) slumped 12.3 per cent after the company said it terminated buyout discussions with Arkhouse Management and Brigade Capital.

(with Reuters inputs)