The dust of the general election has settled! How will the US stock market perform after past elections? What other major schedules are worth paying attention to?

With Trump back in the White House, a series of 'Trump trades' in the global financial markets undoubtedly plunged into all-night revelry.

At the same time, it also drove the three major US stock indexes to further refresh their historical highs, with the S&P 500 index achieving its best performance on an election day in history.

Wall Street analysts say that the market is digesting the bullish factors of Trump returning to the White House. Looking ahead, how will the US stock market perform?

From historical data, other than negative returns during the Bush administration, the US stock market has shown strong growth in each presidential term.And looking at it on an annual basis, the performance in the first year of each president's term is often good, with most able to achieve double-digit gains.

With the dust settling on the U.S. presidential election, Goldman Sachs expects that the U.S. stock market will continue to rise, with the upward momentum expected to continue at least until the end of the year. The bank's analysts provided three reasons:

Firstly, looking at historical trends, the U.S. stock market tends to have a strong rally at the end of election years. Secondly, as investors reallocate funds into the stock market, equities are likely to rise. Finally, Goldman Sachs speculates that merger and IPO activities driven by the Trump administration will further support stock prices.

Morgan Stanley's Chief U.S. Stock Strategist Mike Wilson, on the other hand, forecasts that with the U.S. presidential election over and concerns about missing out on market opportunities at year-end (FOMO) starting to play a role, the S&P 500 index may continue to rise in the final stages of 2024.However, he also warns that due to the lack of clear catalysts, this bullish market sentiment may fade as 2025 approaches.

Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management, stated that U.S. single stock futures rose as the election results were announced. In our base prediction, we expect the S&P 500 index to rise to 6600 points by the end of 2025.This is thanks to the moderate growth of the US economy, lower interest rates, and continuous structural drive of artificial intelligence.

Market analysis also believes thatTrump's long-term bullishness in his tax reduction policy supports the profitability of US stock companies, overall bullish for US stocks,In terms of structure, small cap stocks and cyclical industries may perform better, such as traditional energy like finance and fossil fuels, poised to outperform large caps.

However, while US stocks are rising, many analysts also caution thatTrump's return brings not only bullish news.

Citi's Drew Pettit stated that as US stocks rise, the flip side of bearish sentiment also exists: "When we really think about what is happening outside of the stock market today - interest rates will rise.In the long term, if interest rates continue to rise, we believe this will limit the fair value of the stock market including small caps.”

Nomura's economist predicts that after Trump returns, the Federal Reserve is expected to only cut interest rates once in 2025, followed by keeping the policy rate unchanged until the actual inflation impact brought by tariffs has passed.

What should be the focus next?

At 3:00 a.m. Beijing time on Friday, the Federal Reserve will announce the latest interest rate decision. At 3:30 a.m. after, Powell will hold a press conference.

The market generally expects the Federal Reserve to continue its loose cycle in November.All analysts expect the Federal Reserve to cut rates by 25 basis points, which is highly consistent with the pricing in the money market.

However, looking ahead at the future rate cut path,Due to the widespread perception of Trump's policies leading to inflation, the market prices for the November and December meetings are less than 50 basis points.

Many analysts believe that the policies proposed by Trump, including raising import tariffs and additional tax cuts, may rekindle inflationary pressures, and these policies will be more inflationary than those of Janet Yellen. Therefore, Trump's victory may severely impede the Fed's loose path.

After Trump was elected President of the United States, some Wall Street giants lowered their bets on future rate cuts by the Fed.

JP Morgan Chase economist Michael Feroli adjusted his forecast for the Fed's interest rate path, writing in Wednesday's report that the Fed may cut rates by 25 basis points in both the upcoming meeting this month and in December, followed by quarterly rate cuts starting from March next year, that is, cutting rates only once per quarter until the federal funds rate reaches 3.5%. JP Morgan Chase believes that Trump's reshaping of the Fed's capabilities may only be realized slowly over time. Nomura's David Seif and other economists continue to predict that the Fed will implement two 25-basis-point rate cuts this year. However, their expectations for rate cuts next year are quite pessimistic, now forecasting only one cut, far below their previous estimate of four cuts next year. Nomura has raised its forecast for the terminal rate of the Fed's rate cuts by 50 basis points, to 3.625%.

Analysis suggests that the Fed's statement is expected to emphasize that economic risks are 'roughly balanced' and will maintain flexibility on the future rate path.The market will closely monitor Chairman Powell's speech, particularly his views on the potential impact of Trump's policies.Powell may reiterate the Fed's position of adjusting policies flexibly based on data.

In addition to the Fed, China Merchants Securities also stated,The next 1-2 months are important milestones for observing Trump's new policies.

According to the normal procedure, after the election results are confirmed (timing unknown), Trump will deliver a victory speech. In November and December, there will also be a new president transition period. During this time, Trump can form a cabinet, streamline personnel and institutions. We will continue to monitor the nominations of officials. The congressional swearing-in will be held on January 3rd and the presidential inauguration on January 20th next year. Trump's inaugural speech and a series of executive orders that may be issued from late January to early February are important windows for us to observe Trump's governance direction.

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