Next week’s Inauguration Day will finally give investors a sense of what Donald Trump’s return to the White House will mean for markets. Last year, stocks rallied in the so-called “Trump rally” after Trump’s victory in November, boosting those parts of the market expected to benefit most from the president-elect’s pro-growth policies and promises to roll back federal regulations. Small-cap stocks surged. Financial stocks rose, as did energy stocks. But the market has since declined. Earlier this month, the S&P 500 erased nearly all of its gains since the election, in part because of investor concerns that Trump’s trade and immigration policies could reignite inflation and hurt the market more than it helped. .SPX 3M MOUNTAIN S&P 500 PAST THREE MONTHS Now, as the curtain rises on Trump’s second campaign, investors will confirm that the president-elect is actually on track to impose tariffs on imported goods and other items in his long-term policy What actions will be taken on the list of campaign pledges – this will determine where stocks go next and determine which securities will be the biggest winners and losers. “In my opinion, everything is going to be driven by what Trump does on Monday,” said Charlie Ashley, portfolio manager at Catalyst Funds. “He’s obviously got 100 executive orders that he plans to sign on day one,” Ashley continued. “In my opinion, this is going to be the biggest event that affects the market, not just next week but for the foreseeable future.” On Friday, stocks were on track to post their first gain in three weeks. As of Thursday, the Dow Jones Industrial Average ended the week up nearly 3%. The S&P 500 rose about 2% and the Nasdaq rose about 1%. Next week will be shortened by the Monday holiday in observance of Martin Luther King Jr. Day. This year, for the third time, Inauguration Day coincides with Martin Luther King Jr. Day. Tariffs and Inflation Tariffs will be top of mind for investors on Monday as they look to figure out how closely Trump will stick to campaign promises that some fear will stoke inflation. Before returning to office, the president-elect has proposed imposing tariffs of 10% to 20% on all imports and a 25% tariff on goods from Canada and Mexico. He said he plans to impose tariffs of up to 60% on imported goods from China. If Trump insists on widespread tariffs, it could hurt stocks, which rely on corporate earnings growth to drive share prices higher in 2025. Indeed, stocks rose this week after December core inflation data released on Wednesday came in lower than expected, with the report showing a slight improvement but still encouraging for investors. The S&P 500 had its best day since November. “We have reason to continue to be optimistic that the market can continue to move higher,” Ashley said. “The most significant factor that could derail this is across-the-board tariffs that lead to inflation. “That’s going to be something I’m looking at,” he added. Punitive trade policies could also mean the Fed stops cutting interest rates, another scenario that markets are unlikely to welcome. At the December meeting, policymakers said they would cut interest rates more slowly in 2025 than expected in September. Winners and Losers Trump’s tariff policies are expected to drive the near-term direction of the broader market, particularly helping or hurting companies with sizable domestic or overseas operations. Small-cap stocks, represented by the Russell 2000 Index, surged 4% this week and are expected to benefit from Trump’s protectionist policies. On the other hand, Apple, whose production is completed overseas, fell more than 2% this week and is down 8% this year. .RUT YTD Mountain Russell 2000 It will also determine the outlook for the rest of the market. Financial stocks, led by the SPDR S&P Regional Banking ETF (KRE), rose more than 6% this week, boosted by reduced regulations and a resurgence in “risky” trading. Oil and gas companies, represented by the VanEck Oil Services ETF (OIH), surged 8% this week ahead of Inauguration Day. The i Shares U.S. Aerospace & Defense ETF (ITA) rose more than 4%. Healthcare stocks could take a huge hit. Investors will also analyze some earnings reports from industrial companies next week. While there won’t be an immediate impact from any potential executive orders from Trump, traders will get an idea of ​​how management is considering any policy changes at their companies. One week ahead calendar all times are Eastern Time. The market is closed on Inauguration Day and Martin Luther King Jr. Day, Monday, January 20. Earnings Tuesday, Jan. 21: Seagate Technology, Capital One Financial, Netflix, United Airlines, 3M, KeyCorp, Fifth Third Bancorp, DR Horton, Charles Schwab Earnings Wednesday, Jan. 22 at 10 a.m. Leading Indicators (December) Earnings: Steel Dynamics , Kinder Morgan, Discovery Financial Services, Procter & Gamble, Abbott Laboratories, Johnson & Johnson, Halliburton, GE Vernova Thursday, January 23, 8:30 AM Continuing Unemployment Benefits Application (01/11) 8:30 AM Initial Claim Jobless Claims (01/18) 11am Kansas City Fed Manufacturing Index (January) Gains: Intuitive Surgical, Texas Instruments, CSX, Freeport-McMoRan, Union Pacific, McCormick & Co., Elevance Health, Northern Trust, GE Aerospace Friday, January 24 9:45 AM Composite PMI preliminary (January) 9:45 AM S&P Manufacturing PMI preliminary (January) 9:45 AM S&P Services PMI preliminary (January) ) 10 a.m. Existing Home Sales (December) 10 a.m. Michigan Sentiment Finale (January) Gains: Verizon Communications, U.S. Express
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