How long can the stock market rally last after Trump becomes President of United States?
I believe that in the past week, everyone holding U.S. stocks has made money. The market was unstable before the election, but once Trump was confirmed as the president, a wave of growth followed.
In my view, there are three reasons why the market has surged.
First, the market has reduced uncertainty in the short term, and the market dislikes uncertainty. This is why we often see significant volatility before earnings announcements or key data releases; these are all forms of uncertainty for the market.
With Trump in office, there’s temporarily less uncertainty, and it’s also certain that corporate taxes will not increase, which leads to my second point.
Second, Trump’s presidency also implies that corporate taxes will be further reduced. Back in December 2017, Trump reduced corporate taxes from 35% to 21%, marking the largest reduction in decades. In a low-tax environment, many companies have recorded peak earnings. In such a setting, companies find it easier to accumulate cash, which many have used for stock buybacks. More companies can also seize this opportunity to expand and grow quickly.
So, Trump’s campaign promise this time is to further reduce corporate taxes. This explains why the market reacted with such enthusiasm after his election.
Third, the Federal Reserve’s interest rate cuts. On Thursday, the Fed announced a 0.25 percentage point reduction in the benchmark interest rate, following a substantial 0.50 percentage point cut in September 2024. This is the Fed’s second rate cut in two months.
Small-cap stocks in the market have surged due to a combination of factors. As growth stock specialists, we stand to benefit in this trend. Over the past two years, there’s been continuous talk of rate cuts, and looking back at history, the major rallies in growth stocks have often occurred after rate cuts.
Recently, you might have noticed that some of the stocks that surged in 2020 have made a comeback, such as $Upstart (UPST.US)$ , $Tesla (TSLA.US)$ , and $Bitcoin (BTC.CC)$ -related stocks. Coupled with the broader catalysts from AI, I believe that while a short-term pullback in the market is not out of the question, this could potentially mark the beginning of a significant long-term trend.
I hope my simple sharing can help those of you investing in foreign stocks achieve your financial goals.
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Calderonwi : Should last about 4 years
103231076 : good
MonkeyGee : made more on one week of Trump than 4 years of Biden! welcome back Pres Trump.