"Trump's Second Term US Exceptionalism to Drive Stock Market and Dollar This Year"

There is an analysis that the American exceptionalism policy of the second Donald Trump administration, which will be launched this month, could drive the US stock market and the value of the dollar this year.

According to a survey conducted on 393 subscribers of Bloomberg News terminals and online news by Bloomberg News' survey service 'MLIV Pulse Survey' on the 5th (local time), 61% of respondents predicted that the S&P 500 index, centered on large-cap stocks, would rise by the end of this year due to the strong US economy and corporate earnings. 29% expected it to fall below the current level, and 10% anticipated it to remain similar to the current level.

Regarding the outlook for the US dollar due to the policies of the second Trump administration, 51% of respondents said the dollar would strengthen. However, 27% expected the dollar to weaken, and 22% believed that the policies of the second Trump administration would not be a major factor affecting the dollar.

In this context, Bloomberg analyzed that there are coexisting views that Donald Trump, the US president-elect, is expected to boost economic growth through tax cuts and deregulation, while trade disputes could fuel inflation and hurt private consumption. Noel Dickson, a macroeconomic strategist at US bank State Street, agreed that the policies of the second Trump administration could raise stock and dollar values but forecasted that the continuous rise in commodity prices due to tariffs could sharply weaken household demand in the second half of 2025.

Last year, the S&P 500 index rose 23.3%, powered by the artificial intelligence (AI) boom. The S&P 500 index also posted an annual return of 24.2% in 2023. The two-year return from 2023 to 2024 reached a remarkable 53%. This is the highest two-year performance since the IT bull market of 1997-1998, which yielded a 66% return. The value of the dollar also rose the most in about 10 years last year.

Due to concerns about reigniting inflation, 57% of respondents expected Treasury yields to rise early this year. The yield on the US 10-year Treasury note is currently 4.630%. It surged sharply after the Federal Reserve (Fed), the US central bank, reduced the number of rate cuts this year from four to two in its dot plot on the 18th of last month.