5 Important Factors That Could Send the Stock Market Soaring

For the majority of 2024, the stock market enjoyed relatively smooth sailing. While stocks endured a few substantive pullbacks of 5%-plus, the S&P 500 rose nearly 20% between January 1 and October’s end.

But the U.S. presidential election and Donald Trump’s subsequent victory threw a wrench into the mix. The market’s once-steady rise quickly became more like a wild roller coaster ride.

Stocks began falling at the start of the new year, only to rally strongly into mid-February as the S&P gained more than 5%. But then another selloff began. And over the past month, the market has crashed almost 7% lower – its worst selloff since 2022. 

The dust may not have settled yet; but we believe stocks are approaching their next turn on this roller coaster – and we think they’ll be roaring higher into the summer. 

There are five important reasons driving this bullish outlook…

Ending With a Fizzle 

First and foremost, we expect the ongoing tariff drama should soon pass. 

The first two months of Donald Trump’s second term as president have been dominated by tariff announcements. For a while, it seemed the president was threatening fresh duties every single week.

All that drama has created significant economic uncertainty, driving slowed economic activity and depressed consumer confidence and stoking inflation fears.

We expect this will all come to a head next week, on Wednesday, April 2 – what Trump is calling “Liberation Day.” That’s when he plans to launch his biggest wave of tariffs yet. According to President Trump, this is the “big one.” It will include reciprocal tariffs on multiple countries, potentially even sector-level tariffs (though recent reporting suggests those could be off the table for now). 

But we think this show will end with more of a fizzle, not a bang. 

Treasury Secretary Scott Bessent recently said he expects the U.S. to negotiate trade deals with its major trading partners soon after April 2, meaning the tariffs wouldn’t stay in place for long. If he’s right, then all this drama should end quickly. 

After all, this is the “big one.” Once Trump negotiates his intended deals on this next batch of tariffs and they are repealed, what happens after? In our view, probably nothing. That’s because there is no “other shoe to drop,” if you will. This is the finale. Once it has concluded, this story should be over. 

So, here’s what we see as the base-case scenario. “Liberation Day” comes. New tariffs are enforced. The U.S. negotiates trade deals with its major trading partners. The tariffs get repealed, and we put all this nonsense behind us. 

The ensuing relief should help boost stocks into summer. 

Two Major Shifts to Boost the Stock Market

Once the policy uncertainty is behind us, the White House will likely shift its focus to tax cuts. 

Wall Street abhors tariffs; but it certainly loves tax cuts. That’s why stocks initially soared after Election Tuesday – investors were celebrating the potential major cuts to come. 

Much to Wall Street’s chagrin, the White House has been squarely focused on tariffs since Inauguration Day, not making progress on a big tax cut package. But we think that will change by late April. 

We expect that once we see resolution to the impending “Liberation Day,” there will be a lot of headlines about politicians inching closer to tax cuts over the summer.

This policy shift from the White House should boost stocks throughout April, May, and June. 

And this isn’t the only major shift coming down the pike… 

The third bullish factor driving our outlook is that the U.S. Federal Reserve should pivot back into rate-cutting mode shortly.

The Fed did cut interest rates a few times in 2024, but it has been on pause over the past four months amid worries about sticky inflation. 

It now appears those inflationary pressures are subsiding, with oil prices dropping below $70 a barrel and the Truflation rate collapsing below 2% in March. Meanwhile, the economy has started to show some signs of stress recently via a slowdown in consumer spending and a big crash in consumer confidence. 

As such, it seems likely that the Fed will resume its rate-cutting campaign soon. 

In fact, Wall Street thinks another rate cut will happen by July and that the central bank will cut interest rates between two and three times this year. We happen to think that the Fed will cut rates even earlier than that, in June, and believe it could cut up to four times in 2025. 

Either way, multiple rate cuts are most likely on the way. And that should help stocks greatly.