Trump's Pre-Midterm Economic Policy Expectations Favor Cyclical Stocks

On January 13, Wall Street interpreted Trump's recent economic statements as a signal for growth, betting that he will make every effort to stimulate the economy and consumption before the November midterm elections, which is favorable for the performance of cyclical sectors such as industrials, raw materials, and consumer discretionary. UBS believes that the relevant policies are more election-oriented, focusing on prices, housing, gasoline, and interest rate levels. Although the idea of a cap on credit card interest rates may temporarily weigh on bank stocks, both UBS and JPMorgan are optimistic about the performance of cyclical stocks, expecting that easing inflation will further drive economically sensitive sectors to outperform the broader market. BTIG pointed out that the S&P 500 index is approaching the 7,000-point mark, which may lead to a period of volatility and adjustment. Most institutions believe that cyclical stocks are likely to become the main theme of this round of the market.