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Donald Trump’s election victory last month ignited a trading frenzy at brokerage houses and Wall Street banks as expectations for sweeping policy changes added fuel to a US stock rally.
Trading volumes in US equities jumped 38 per cent in November from the same month in 2023, reaching levels not seen since the meme stock craze of early 2021 and this month are still running above their average for the year, according to exchanges operator Cboe Global Markets.
The jolt of trading activity swept through brokerages preferred by retail clients, such as Interactive Brokers and Robinhood, as well as institutional powerhouses including JPMorgan Chase and Citigroup. It comes as expectations that Trump will take a more business-friendly approach sent investors pouring into US stocks after the November 5 election.
Trading activity has also been boosted more broadly by a strong year in US markets, with Wall Street’s S&P 500 index rising 27 per cent year to date to a series of record highs.
There has been an “incredible level” of investor interest in markets in recent months, and “that does translate into trading activity”, Rick Wurster, who is due to take the reins as chief executive of brokerage Charles Schwab in January, told the Financial Times.
“I don’t think turning the calendar to 2025 is going to change it,” he added.
The increase in activity is also benefiting Wall Street’s biggest banks.
JPMorgan Chase’s trading revenues in the final three months of 2024, including the weeks around November’s election, were on track to rise “a touch better” than 15 per cent from a year earlier, retail banking chief Marianne Lake said at this week’s Goldman Sachs financial services conference.
That figure is more than triple the 5 per cent gain analysts had been forecasting prior to Trump’s victory, according to data from Bloomberg.
“There’s likely to be meaningful policy change,” said Lake of the Trump administration’s potential impact on markets and the economy, adding that she shares the market’s broad optimism about the president-elect. “There’s more likely to be a sort of pro-growth type agenda,” she said.
Citigroup this week said its fourth-quarter trading revenue was set to rise as much as 19 per cent from a year ago.
Similarly, Robinhood, a brokerage favoured by younger traders, this month said equity trading volumes grew 16 per cent between October and November, while crypto trading volumes leapt more than 500 per cent. Interactive Brokers said activity, as tracked by daily average revenue trades, rose 17 per cent on the same basis.
Shares in Schwab and rival Interactive Brokers have risen by 31 per cent and 47 per cent in the past three months respectively, outpacing the broad S&P 500’s 10 per cent rise. Online broker Robinhood’s shares have almost doubled, boosted by its strong cryptocurrency business.
Steve Quirk, Robinhood’s chief brokerage officer, said trading volumes on its platform “exploded” on election night.
“We started to see massive amounts of volume in the crypto space,” he told attendees of the company’s investor conference last week, adding that shares in companies such as Tesla “just took off in terms of volume and in price”.
Steve Sanders, head of product development for Interactive Brokers, said, “people like to trade when there’s volatility, so certainly one could say that the new administration likes volatility and will increase [it]”.
The Federal Reserve’s expected interest rate cuts and a “more relaxed” regulatory environment under Trump would lead to “higher trading volumes into next year”, added Patrick Moley, senior research analyst at Piper Sandler.
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