Bank stocks experienced a surge in overnight trading due to investor reaction to Donald Trump's lead in the presidential election.

The market's optimism is driven by the expectation of reduced regulation under a Trump administration, which would particularly benefit financial institutions.

Citigroup saw a significant increase of around 5% in special late trading on the Robinhood platform, while Bank of America rose by over 3%. Wells Fargo and Goldman Sachs also saw gains of more than 2%. Analysts predict that bank stocks will thrive with GOP control, as they anticipate a rollback of oversight by the Consumer Financial Protection Bureau.

TD Cowen analyst Jaret Seiberg highlighted that Trump's administration may ease regulatory burdens, potentially leading to lower capital requirements for trading banks and maintaining current credit card late fee policies. However, he cautioned that there could be potential inflationary risks arising from Trump's proposed tariffs and deportation plans.