Investors are preparing to welcome Donald Trump into office for a second time, hoping to benefit from his pro-business policies but also wary of his protectionist trade policies, particularly his stance on tariffs. remained vigilant.
President Trump entered office with an ambitious agenda that spans trade reform, immigration enforcement, tax cuts and cryptocurrency deregulation.
Investment managers are adjusting their portfolios across asset classes and watching his inaugural address for signals that could trigger short-term market moves.
“Uncertainty remains the watchword, with everyone on high alert for answers to questions such as whether the threat of tariffs becomes a reality or remains a negotiating gimmick from day one,” said Sam Stovall, chief market strategist at CFRA Research. “I am doing so,” he said.
But many are hopeful about the relatively subdued reaction to the new president's first words and actions.
“Trump's bark may be worse than his early bite,” said Michael Alone, chief investment officer at State Street Global Advisors.
He expects the timing and impact of President Trump's most important policy changes to be long-lasting.
Still, President Trump's tariff plans could further stoke inflation concerns and weigh on bonds and stocks, while efforts to tighten immigration regulations could also spill over into those markets. Bank stocks rose due to the deregulation movement, and virtual currencies soared.
As they reported soaring profits, Wall Street CEOs told investors that the next U.S. administration will be business-friendly and good for banks.
“Investors are enthusiastic about the potential for deregulation and potential corporate and business tax cuts,” Stovall said.
The rate of increase in the S&P 500 stock index since the election has cooled to 2.7% after falling in early January due to inflation concerns.
President Trump plans to start his presidency with a series of executive orders targeting key policy areas such as immigration and energy.
The crypto industry expects President Trump to fulfill his campaign promises as “crypto president” by creating a federal Bitcoin stockpile, expanding bank access, and creating a Cryptocurrency Council. Reuters previously reported.
In the first year of Trump's first administration, the S&P 500 rose 19.4% after rising 5% during his first 100 days in the Oval Office.
Throughout President Trump's first term, the S&P 500 rose nearly 68%, but the market went through a volatile period, in part due to Trump's trade war with China.
Following President Trump's final inaugural address in January 2017, the S&P 500 ended the day down 0.3%.
Much of the trading reaction may not become clear until Tuesday, as U.S. stock and bond markets are closed on Monday for Martin Luther King Jr. Day.
