Wall Street interprets Trump's growth-promoting signals: Can cyclical stocks become the next main theme of the market?

【BlockBeats】As the US presidential election approaches, Wall Street has been closely studying a series of economic remarks by Trump. From calls for interest rate cuts to proposals for credit card rate controls, the market generally interprets these measures as “strong signals to boost growth.” The consensus among investment institutions is: the government will fully stimulate the economy before the election. What does this mean for cyclical assets? The answer might be more complex than you think.

In simple terms, the policy goals of the Trump administration are twofold—keep the economy active and ensure that the cost of living for ordinary people doesn’t become too high. From this perspective, sectors like industrials, raw materials, and non-essential consumer goods are in the spotlight. Defensive stocks? That’s not the current focus.

What do investment banks think? Raymond James analysts believe that with strong monetary and fiscal stimulus expectations, it’s hard to imagine an economic recovery failing. UBS also pointed out that these policies are largely driven by election considerations; voters’ core concerns remain prices, housing costs, oil prices, and interest rates—all of which directly impact wallets.

Interestingly, Trump’s proposal to cap credit card interest rates initially scared bank stocks. But UBS research team isn’t too worried, believing that even if such policies are implemented, they are usually temporary and limited in scope, unlikely to cause long-term shocks to the entire financial sector. They even see the pullback in bank stocks as a buying opportunity. JPMorgan’s stance is similar, expecting that as inflation continues to slow, there is room for further stimulus in 2026, which would be positive for cyclical stocks.

However, there is a risk point worth noting. The S&P 500 index is now approaching the 7000-point psychological level. Historical experience suggests that before breaking through such important psychological thresholds, the market often undergoes a correction. BTIG analyzed the past five instances of crossing the 1000-point mark, four of which were accompanied by a phase of correction. So in the short term, policy uncertainties and earnings season may bring volatility.

But overall, most institutions remain optimistic about the performance of cyclical stocks. Will the expectation of growth and improving corporate profits make cyclical stocks the main players in this round of market? There is plenty of room for follow-up observation. Market sentiment may indeed fluctuate, but the fundamental support seems stronger.