What to Expect From the Stock Market in President Donald Trump’s Economic Golden Age
In the lead up to the inauguration of President-Elect Donald Trump, the stock market’s performance of late could be summed up in a word – volatile. In recent weeks, the Cboe Volatility Index, which has earned the nickname as the ‘fear gauge,’ climbed to a reading of 20, reflecting a shift in sentiment among investors from confidence to worry as they consider the potential risks of a Trump administration on stocks.
So far in 2025, the three major indices – the S&P 500, Dow Jones Industrial Average and Nasdaq Composite – have taken investors on a roller coaster ride. And investors might want to buckle up because the ride is far from over.
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On the one hand, investors and corporate America alike are anxiously awaiting the administration’s lighter regulation on businesses and pro-growth agenda. On the other hand, there is a sense of déjà vu around issues such as tariffs and taxes that threaten to thwart any progress. In response, the bullish sentiment that surrounded stocks when Trump rang the opening bell on the New York Stock Exchange in mid-December has given way to uncertainty.
From the looks of it, corporate America is showing up for Trump. Coca-Cola issued the company’s maiden Presidential Commemorative Inaugural Diet Coke bottle, the president elect’s drink of choice and a gift from CEO James Quincey.
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And while some politicians on the opposite side of the aisle are choosing to sit out the inauguration on Jan. 20, CEOs and founders are lining up to be there. The roster of attendees includes high-profile names including Elon Musk, Amazon’s Jeff Bezos, Apple’s Tim Cook and Meta’s Mark Zuckerberg, all of whom have been giving millions of dollars to the president elect’s inaugural fund, whose donations have crossed a whopping $170 million, marking a fresh-all time high.
So in what President Elect Donald Trump has described as an upcoming Golden Age of America, should investors be bullish or bearish? While only time will tell, the answer also hinges on the way investors choose to place their bets.
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While there’s no crystal ball, one thing is clear – the new U.S. president isn’t likely to waste any time implementing his policies. This could be beneficial for investors who are waiting to see his plans on hot-button issues like immigration, tariffs and trade, to name a few. In an economy where inflation is already running hot, the president’s tariff plans, in particular, run the risk of keeping the pressure on both the stock and bond markets.
However, the Republican leader is a believer in less government and is therefore widely expected to ease regulations on companies, with pal Elon Musk in his corner. As the CEO of electric-vehicle maker Tesla, Musk knows first hand how excessive regulation and costs can stifle growth and innovation in any given sector of the economy.
Banks are first in line to benefit from less onerous regulation, with stocks like Goldman Sachs, JPMorgan and Wells Fargo coming out of the gate strong with their fourth-quarter profit results. Wall Street CEOs are optimistic that the new administration will be “business friendly” and positive for financial institutions, which are already experiencing soaring profits as deal flow and trading have accelerated of late.
Fellow Wall Street firm Bank of America believes that Goldman Sachs, in particular, should benefit from Trump’s deregulation, with analysts saying in a note, “We expect Goldman Sachs to be among the biggest beneficiaries of a more balanced regulatory environment, especially a change in regulatory attitudes toward the capital markets business.”
With Elon Musk at his side, Trump has been gaining cred in Silicon Valley, too, where much of the world’s technology innovation takes place. With some venture capitalists having felt scorned by President Biden’s policies. Tech pioneer Marc Andreeseen likened Trump’s victory in November to “a boot off the throat.”
Sean Duffy, Trump’s pick to run the U.S. Department of Transportation, has come out swinging. He believes aerospace giant Boeing is in need of some “tough love” after a series of setbacks in 2024, not least the loss of an emergency exit door off one of its 737 planes. Duffy also wants to see electric vehicle owners pay their fair share to use the roadways, considering the bill for road repairs is typically paid through fuel taxes, which would affect drivers of Elon Musk’s Tesla.
Investors and traders are also closely monitoring energy stocks. Since the U.S. election in November, green energy stocks have lost ground amid fears of President-Elect Trump implementing anti-decarbonization policies. However, hedge fund managers cited by Bloomberg say that investors can expect the incoming president to protect U.S. manufacturing and ensure inexpensive energy, which could be beneficial for sectors like solar stocks.
Overall, the excitement felt by many for the incoming administration is matched only by the uncertainty that the markets are feeling at the same time. As a result, the one thing that investors can count on for the near future will most likely be more of what they have experienced so far in 2025 – volatility.