The New York Stock Exchange (NYSE) and Nasdaq, which are the world's most important trading platforms, end the year at even higher levels than we expected. Lower borrowing costs by leading central banks, as well as a particularly fruitful Q3 earnings season, Black Friday and Cyber Monday sales results contributed much to the S&P 500 broad market indicator's climbing to record tops above 6,000, with the Nasdaq 100 index touching the area around 22,000 for the first time ever, compared to nearly 4,770 and 16,667, respectively, at the starting line of 2024. This means the annual performance is nearing 27% for the broad market barometer and 32% for the tech-heavy measure on average. Even if we may halve our potential 2025 percentage growth bets, the output from this moderated inertial scenario would give us 6,850 for the S&P 500 and 25,500 for the Nasdaq index, even though a bolder extrapolation is quite possible.

As an example, the road map made by Capital Economics before Christmas supposed the S&P 500 may finish 2025 at 7,000. This forecast came out despite the researchers' belief that the Federal Reserve's policy could be "a bit less accommodative” than they had previously projected, while mostly attributing the recent one-off slide in the S&P on the next day after the latest meeting of the U.S. financial regulator to a correlating sell-off in public bonds. It appears that the market crowd agrees with this statement, since the bulls have recovered so quickly. Monetary drivers are probably not decisive in this context. What could be more important is the extent of sensitivity of the American economy to trade battles with China and other rival economies under the upcoming Republican administration. Trump 2.0 is a "recipe for volatility" in 2025, says Piper Sandler, as its analysts are feeling the current situation may mirror the early 1980s when Ronald Reagan inherited great and sticky inflationary pressures accompanied by policy dysfunction and surging federal spending. The investment bank marked the risks of recent rate cuts "gone too far, too fast" while tariffs may push prices higher.

Goldman Sachs believes the Trump administration will implement targeted tariffs on imported automobiles and certain imports from China, as well as a 15% corporate tax rate for domestic manufacturers. They expect that the cumulative impact of these policy changes on corporate profits may roughly offset one another on net, so that Goldman projects the S&P 500 index to rise to 6,500 by the end of 2025. Morgan Stanley also stressed its base case for the S&P 500 price target at 6,500 on "earnings growth broadening".

The uncertainty surrounding fiscal policy under Trump is added to chances for a potentially negative impact. And so, the first 100 days of Trump's presidency will reveal a seriousness of his purpose to drive to much lower corporate taxes and a more effective government. However, we note that even the difficult progress of legislative initiatives during Trump’s first term on a stage of a divided Congress did not prevent the stock market from further rallying in 2017-2019, and now the Republicans have a clear majority in both the House and the Senate. As the first post-election phase of the so-called Trump trade has gone, its next phase when a revolutionary Republican agenda is going to be implemented step-by-step in practice will be a good stress test for markets. Yet, a protective mood may be united with residual enthusiasm to provide the bullish dynamics at least in the course of the first half of 2025 when about two-thirds of the way to our annual targets could be passed already. A corporate agenda of strong forecasts' transformation into reality can also be helpful on this stage. But the second half of the year may become more data dependent to create volatility in case of weaker-than-expected policy results.

We should not forget that the large tech corporations with American roots are not so closely related to revenues from the United States, selling a lion's share of their products and services to Asia and countries of the “Global South”. The top techs, led by NVIDIA, Apple, Microsoft, Meta, Google, Amazon, Broadcom etc., could play a quasi safe-haven role, especially as new China's stimulus hopes for a record-breaking 3 trillion Yuan (more than $400 billion) in special treasury bonds for 2025 are going to improve the global market sentiment, starting from giant beneficiaries of this policy. The economic growth in China is a very important factor for the country's domestic consumption, including products by transnational companies and local supply chains. Whether the growth pace in China will be sustainable or not will determine the prospect of achieving our target levels for the Wall Street indexes and its flagships in the second part of the year.