After Donald Trump clinched the presidential election, world markets were thrown into uncertainty. But as Wonkblog's Ylan Mui explains, Wall Street bounced back Wednesday morning in an positive opening. (Daron Taylor/The Washington Post)

Wall Street roared to life Wednesday after a tumultuous day of trading in global financial markets amid hopes that president-elect Donald Trump would reinvigorate the American economy by combining massive tax cuts with new government spending.

What initially was a panicked global sell-off Tuesday night transformed into a near-record high for Wall Street by the end of trading on Wednesday. The turnaround began as Trump struck a conciliatory tone overnight in his acceptance speech, calling on voters to “bind the wounds of division.” In addition, the Republican sweep of Congress raised the probability that Trump’s proposals to radically reform the tax code for businesses and individuals and rebuild the nation’s infrastructure could actually become a reality.

The blue-chip Dow Jones Industrial Average surged ahead about 250 points, or 1.4 percent, close to an all-time high — despite futures markets overnight signalling a decline of as much as 800 points. The Standard & Poor’s 500-stock index and the tech-heavy Nasdaq both gained about 1 percent.

U.S. stocks rose sharply on Nov. 9 in a dramatic turnaround from deep overnight losses as Wall Street embraced the upset presidential election victory of Republican Donald Trump. (Reuters)

“The one thing everybody wants is Washington to work and something to get done,” said Joseph Lavorgna, chief U.S. economist at Deustche Bank. “Now you have a situation where you’re going to get arguably a more business-friendly backdrop.”

Even the Mexican peso — which had fallen as the Republican nominee rose in the polls during his campaign — regained some ground after dropping to the lowest level since the 1990s.

The panic in the financial markets had stretched all the way to Asia, where Japan’s Nikkei index plunged more than 900 points, or 5.4 percent, Wednesday. In a flight to safety, gold charged higher, and the yen also surged.

In Europe, major indexes reversed course through the trading day. The Stoxx Europe 600 index opened about 2 percent lower but turned positive in the afternoon. Germany’s main DAX index had fallen by around 1.6 percent before moving modestly into the green, and London’s FTSE-100 was rose 1 percent.

Some analysts said stability was driven in part by expectations that the Federal Reserve would not hike its benchmark interest rate in December. The central bank had hinted it was ready to move following signs of economic resilience, but that could be threatened amid the uncertainty surrounding Trump’s surprising win.

“If it were government by grudge, it’s tough to get economic policymaking done,” said Vincent Reinhart, chief economist for Standish Mellon. “Once you raise your voice to get what you want, then do something with what you’ve got.”

The prospect of a Trump presidency was enough to persuade Mexican leaders to meet last week to craft a “contingency plan” in the event of an “adverse” election result. The head of Mexico’s central bank has compared a President Trump to a “hurricane” that could damage the country’s economy. In addition to hiking tariffs on its exports to the United States, Trump has made building a wall along the Mexican border a hallmark of his campaign. Already, the declining value of the peso has factored into the central bank’s decision to boost interest rates.

“It’s the Pavlovian response: The bell rings, Trump does better, the Mexican [peso] sells off,” said Ed Shill, chief investment officer at QCI Asset Management.

Meanwhile, Japan’s financial authorities and the board of South Korea’s stock exchange called separate emergency meetings in their countries Wednesday morning to discuss the sharp fall in the financial markets.

“We haven’t taken any measures regarding the stock market reaction to the U.S. election yet, but we are constantly monitoring the markets and the U.S. elections,” said Kang Byung-mo, head of financial market analysis at Korea Exchange.

Read more: 

Real-time updates on the 2016 election: Voting and race results

What people really wanted to know about Trump on Election Day