Stocks plunge...

Stocks plunge at prospect of Trump presidency

Dow futures and Mexican peso drop by largest margin in two decades.

By Ben White

Stock futures initially crashed on Tuesday night as Donald Trump was elected president, but began to bounce back after he addressed the nation and pledged to heal divisions.

Futures on the Dow Jones Industrial Average initially plunged by as much as 800 points as investors watched Trump take the lead, but rebounded to a loss of 290 points by 8:30 a.m.

The Mexican peso also sank fast as odds maintained by the New York Times swung hard toward a potential Trump win.

"Officials at the Federal Reserve and Treasury are monitoring global market moves but at this point have no plans for any kind of intervention before the opening bell on Wall Street," a source told POLITICO.

The losses come after a big rally on Wall Street on Monday as polls appeared to suggest Clinton would cruise to victory. Investors view Trump as more risky than Clinton given his protectionist views on trade, pledges to deport millions of undocumented immigrants and concerns about his potential relations with foreign leaders.

Dow futures were down around 445 points as of 10:00 p.m., or about 2.4 percent. Futures and the S&P 500 and Nasdaq were down close to 3 percent as the U.S. flirted with the “Brexit” situation Trump has been predicting for weeks. Markets also sank rapidly when British voters surprised the world over the summer and voted to leave the European union.

The dollar sank and gold rose as investors sought safety in the face of Trump’s march toward the White House. Asian markets also moved lower while the peso plunged 7 percent. The peso has been a proxy for Trump’s chances for months with investors fearing the impact on Mexico’s economy should Trump impose tariffs on the country’s exports.

“This violent and volatile reaction is an indicator of the global view about who is going to win this race and what it’s going to mean,” said David Kotok, chief investment officer at Cumberland Advisors. “Investors around the world don’t know Trump and they don’t know what to expect from him. This is maximum uncertainty with no clarity.”

Other analysts noted that the losses took markets back to where they were before the recent rally. And they suggested that while there could be heavy volatility on Wednesday should Trump win, markets could settle down in subsequent days.

“A big chunk of this is the initial thinking that if Clinton won we’d have only a small rally and now we are getting a big sell-off because this result was so unexpected,” said James Paulsen of Wells Capital Management. “Certainly the losses could broaden out for a while if he does win. But then people will ask how much things are actually going to change.”