The S&P 500 opened higher on Wednesday following Donald Trump’s victory over Kamala Harris in what many consider one of the closest presidential races in US history.
According to Jay Hatfield, founder and chief investment officer of InfraCap, the strength in the benchmark index is likely to continue through the end of 2025.
Hatfield predicts that the S&P 500 will rally an additional 23%, reaching the 7,000 level by the end of next year under a Republican administration.
Why is Trump good for the S&P 500?
Hatfield is optimistic about the S&P 500’s performance in the coming year, primarily due to the expectation that Trump will favor lower taxes and business-friendly regulations.
However, some experts worry that Trump may introduce higher tariffs, which could pose challenges for importers.
Additionally, retaliatory tariffs from other countries on US goods could impact exporters, adding to concerns.
Despite these worries, Hatfield believes the fears surrounding tariffs are overblown.
He explained, “People are too nervous about tariffs because they overlook the fact that tariffs generate significant revenue. If that revenue is used to cut corporate taxes, it provides a major offset and is pro-investment,” he told CNBC in a recent interview.
While the S&P 500 had a weak 2022, it has otherwise experienced a sharp uptrend since the onset of the COVID pandemic.
The index plummeted to a low of 2,300 in March 2020 but is now trading at 5,900—an impressive gain of over 150% in less than five years.
Hatfield is confident that the rally isn’t over yet and expects the index to gain another 1,100 points over the next 14 months.
Leon Cooperman sees a different outlook for the S&P 500
Billionaire investor Leon Cooperman holds a more cautious view of the market. He believes the S&P 500 is reflecting an optimism that may be unwarranted.
Cooperman, the Chairman of Omega Advisors, revealed on CNBC’s “Squawk Box” on Wednesday that he was dissatisfied with both Kamala Harris and Donald Trump, stating, “We needed an adult in the room, and we didn’t get one.”
He added, “A country that elects Donald Trump is a country that’s very unhappy.”
Cooperman expects the S&P 500 to decline next year and has said he would consider shorting the index if it surpasses the 6,400 level in 2025.
Cooperman’s cautious outlook is also influenced by the ongoing conflict in the Middle East and concerns about the US fiscal situation.
At a price-to-earnings ratio of 22, he sees the market as fully priced.
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