The S&P 500 opened Wednesday higher following Donald Trump’s win over Kamala Harri in what many consider to be one of the closest presidential elections in US history.
According to Jay Hatfield – founder and chief investment officer at InfraCap – the strength of the benchmark index will likely continue until the end of 2025.
Hatfield predicts the S&P 500 to rally by an additional 23% and reach the 7,000-level by the end next year, under a Republican Administration.
Why is Trump good news for the S&P 500 index?
Hatfield is optimistic that the S&P 500 will perform well in the coming year. This is mainly due to the expectation of Trump favoring lower taxes and business friendly regulations.
Some experts are concerned that Trump could introduce higher tariffs which could cause problems for importers.
Exporters may also be concerned about retaliatory duties imposed by other countries on US products.
Hatfield, despite these concerns, believes that the fears surrounding tariffs have been exaggerated.
He said, “People are overly concerned about tariffs, because they don’t realize that tariffs generate substantial revenue.” In a recent CNBC interview, he said that if the revenue was used to reduce corporate taxes, this would provide a major offset. It is also pro-investment.
The S&P 500 has a weak 2022 but it has experienced a sharp upward trend since the onset the COVID pandemic.
The index fell to a low level of 2,300 in march 2020, but is now trading at $5,900 — an impressive gain of more than 150% in less that five years.
Hatfield believes that the rally hasn’t ended yet and expects to see the index gain another 1,100 point over the next fourteen months.
Leon Cooperman has a different outlook on the S&P 500
Billionaire Leon Cooperman has a more conservative view of the markets. He believes that the S&P 500 reflects an unwarranted optimism.
Cooperman, Chairman of Omega Advisors revealed on CNBC’s “Squawk box” on Wednesday, that he wasn’t satisfied with Donald Trump and Kamala Harris, saying, “We needed a grown-up in the room and we didn’t receive one.”
He said, “A country electing Donald Trump is one that’s very unhappy.”
Cooperman expects that the S&P 500 will decline next year. He has stated that he would consider selling the index if the index exceeded the 6,400 level by 2025.
Cooperman’s cautious view is also influenced the ongoing conflict in Middle East, and by concerns about the US financial situation.
He believes that the market is fully priced at a price to earnings ratio of 22.
This post Will S&P500 reach 7,000 by next year’s end under a Republican Government? This post may be updated as new information becomes available
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