What Could a Trump 2.0 Presidency Mean for Stocks? Possibilities Range from Trade Wars and Fed Rate Hikes to an AI Bubble
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Another trade war with China could be a headwind for stocks. Trump has talked about 60% tariffs, which would disrupt trade and fuel inflation.
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Higher inflation would likely prompt the Fed to raise interest rates faster, which would be a negative for equities.
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Tariffs and trade wars would subtract up to 1.5% from GDP growth, hurting corporate profits.
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The US dollar may strengthen significantly due to tighter Fed policy and trade conflicts, which would hurt exports.
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An AI stock market bubble could outweigh the macro headwinds, limiting downside. Capital Economics would only slightly trim its S&P 500 forecast of 6,500.