US Stocks Look Poised for Gains Under Trump 2.0
Market Outlook:
US stocks have faced headwinds recently, but the S&P 500 (^GSPC) has found support following a positive inflation report. Investment strategist Michael Hartnett predicts further declines will be limited by President-elect Donald Trump's policies.
Trump's Impact on Stocks:
During his first term, Trump viewed the stock market as a barometer for his administration. Investors expect him to remain sensitive to market pullbacks.
Positive Policies for the Market:
* Deregulation: Benefits banks and promotes dealmaking.
* Crypto-friendly stance: Boosts the crypto market.
* Lower corporate tax rates: Enhances corporate profitability.
* "America First" mantra: Spurs optimism among small businesses and small-cap companies.
Cautions and Challenges:
Hartnett acknowledges concerns such as:
* High market valuation
* Concentration in index (10 stocks comprise 40%)
* Sustainability of "Trump trades" (e.g., small caps, energy stocks, financials)
Strategy and Outlook:
Strategists generally view Trump's policies as supportive for the US equity market, but gains are not expected to be linear. Evercore ISI's Julian Emanuel predicts volatility and swings between "risk on" and "risk off" sentiment. Despite these challenges, he projects the S&P 500 to reach 6,800 by 2025 (an increase of 13%).