What's Going On With Vanguard S&P 500 ETF (VOO) This Week?

The Vanguard S&P 500 ETF VOO surged 2.01% to $540.75 on Wednesday morning after Donald Trump secured victory in the 2024 presidential election.

VOO, a popular exchange-traded fund that mirrors the S&P 500 index, responded positively to the prospect of tax cuts, deregulation and a potential economic boost driven by Trump's policy agenda.

What To Know: Trump's proposed tax policies are a primary factor behind VOO's rise. Investors are reacting positively to his pledge to extend and expand the 2017 Tax Cuts and Jobs Act (TCJA), which lowered corporate tax rates and provided incentives for business investment.

Trump has indicated that his new term would bring additional cuts, including the reinstatement of the state and local tax deduction. Lower taxes and a more business-friendly fiscal environment typically increase corporate earnings, a boon for large-cap companies that dominate the S&P 500. With VOO tracking the S&P 500, any growth in these companies' profits would directly benefit the ETF's holdings.

In addition to tax policy, Trump's approach to trade has spurred rallies in sectors like manufacturing, energy and industrials. His campaign promises of imposing higher tariffs on imports, particularly from China, could signal a push to protect American businesses from foreign competition.

Read Also: Trump’s Historic Return: 7 Ways His Second Term Could Impact The US Economy

What Else: While such tariffs could raise consumer prices, they also encourage domestic production, potentially boosting profits for U.S.-based companies.

Many large-cap stocks in VOO, including major industrial and energy firms, could see positive impacts from a shift in demand toward U.S.-made products. However, investors are keeping a cautious eye on inflationary risks associated with these tariffs.

Trump's proposed regulatory rollbacks, particularly in energy and environmental regulations, also provide potential upside for VOO's key sectors. His policies could ease compliance costs for companies in these industries, supporting growth in their stock valuations.

Trump's agenda favors traditional energy producers, aligning with the S&P 500's mix of companies, many of which are directly tied to traditional energy and manufacturing sectors. As VOO closely reflects the structure of the broader economy, these moves toward deregulation could have a disproportionately positive effect on its overall returns.

Read Also: Trump’s Big Tech Policies: What GOP Victory Means For Apple, Google, Microsoft

According to data from Benzinga Pro, VOO has a 52-week high of $538.76 and a 52-week low of $397.84.