The S&P 500 soared to record highs in the first year of Donald Trump’s presidency. But will it keep flying up and to the right?
A professional investor thinks so. GOBankingRates spoke with him about why he has high hopes for the stock market during Trump’s second term.
Economic Growth
“Public policy changes are supporting business growth by lowering taxes and cutting back on regulatory burdens,” notes Levon Gasparian, investor and founder of EntityCheck.com.
In their 2026 economic forecast, Goldman Sachs predicts 2.5% GDP growth this year. They also expect two quarter-point interest rate cuts from the Federal Reserve. Lower interest rates spur economic growth by making borrowing cheaper, helping businesses to expand and hire. That economic stimulus comes with a risk however: Higher inflation.
Still, Goldman Sachs forecasts PCE inflation to drop to just 2.1% by the end of the year. That combination of solid GDP growth and cooling inflation would certainly help fuel investors’ confidence in the stock market.
The Trump administration has also prioritized lowering the cost of energy with oil-friendly policies. They’ve succeeded on that front: The Federal Reserve shows oil prices dropping from $80.63 just before President Trump’s inauguration to $62.53 in February 2026 — a 22.4% drop.
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Profit Growth
Gasparian also sees companies growing more profitable, not just growing in raw size.
“Many companies have increased profits due to tax cuts and fast-improving AI, which companies can reinvest or pay back to their investors.”
Tax cuts, AI development and reduced regulation aren’t the only forces that could drive profits and stocks higher. Brokerage firm Fidelity sees 2026 potentially setting new records for initial public offerings (IPOs), and a separate Goldman Sachs report expects mergers and acquisitions to “surge” in 2026 under the Trump administration.
Volatility Creates Buying Opportunities
President Trump has a reputation for unpredictability, which has at times sent spikes of volatility through the stock market. That volatility doesn’t spook Gasparian. If anything, it provides discounts to buy in cheaper.
“History shows that stocks recover after corrections, going on to exceed previous highs. After corrections of 10% to 20%, the market produces double-digit gains within the next 12 months about 70% of the time,” he explained.
The trick? Don’t let today’s unpredictability scare you from continuing to buy and hold stocks long-term. The market goes up, it goes down, it goes up again; your job as an investor is to resist emotion and stick to your core financial strategy.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m a Pro Investor: 3 Reasons I’m Optimistic About the Stock Market Under Trump
