Wall Street has taken notice of Donald Trump’s election victory, with stocks rising as investors anticipate tax cuts and deregulation from the president-elect. The “Trump trade” is in full swing, with perceived winners like Tesla and private prison operators seeing significant gains.
However, some analysts warn that broad tariffs could hurt company earnings and potentially cause a destabilizing global trade war. Industry groups and economists have cautioned that tariffs could accelerate investment in reshoring jobs from abroad, but the impact is uncertain.
Corporate leaders are also concerned about Trump’s immigration plans and the potential for higher interest rates, which could threaten the independence of the Federal Reserve. The Fed chair, Jerome Powell, defended the institution’s independence at a recent news conference.
Despite these concerns, many investors believe that Trump will preserve the economy and avoid actions that would destabilize markets. However, the outlook is uncertain, with some analysts predicting a temporary downturn if Trump enacts his plans.
For now, the market remains buoyant, with bulls like Merrill’s Bank of America economist David J. Pollen optimistic about the prospects for growth in the second half of the decade. As one analyst noted, “If he can transactionally make things happen that lower costs, boost productivity, create more predictability,” the outlook is positive.
Source: https://www.nytimes.com/2024/11/12/business/trump-stock-market-tariffs.html