11月7日, Financial Associated Press (Editor Liu Rui): On Wednesday Eastern Time, after the US election situation was determined, the three major US stock indexes hit record highs. The Dow Jones Industrial Average recorded its largest single-day increase since 2022, while the S&P 500 Index also achieved its best performance on an election day in history.

Wall Street analysts say the market is digesting the bullish factors of Trump's return to the White House. Based on Trump's previous commitment to tax cuts and deregulation, it may bring a more positive policy outlook for US companies to promote growth.

However, analysts also warned that Trump's return could likely lead to a resurgence in US inflation, which would limit the Fed's room for interest rate cuts, and the long-term bearish threat to US stocks still exists.

US stocks are digesting the "bullish" factors of the election.

Citi's US stock strategist Drew Pettit said in an interview that the market's positive response to Trump's victory was "expected," partly because the election was essentially a "one-sided" situation. He added that when you observe the market response, you will find that "many Trump trades are leading today."

He added that the market is currently reflecting "bullish rather than bearish". Pettit believes that Trump's promised deregulation and tax cut plans are a "huge driver" for US companies targeting the domestic market.

"US single stock futures rose when the election results were announced. In our base case scenario, we expect the S&P 500 Index to rise to 6600 points by the end of 2025, up nearly 15% from current levels. This is due to our expectation of moderate economic growth in the US, lower interest rates, and the ongoing structural boost of artificial intelligence," said Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management.

He pointed out, 'The Trump administration lowering corporate taxes and/or relaxing regulations on energy and financial sectors could provide additional support.'

Analysts at Janus Henderson Investors stated in the report, 'Trump is seen as supporting lowering corporate tax rates, relaxing regulations, and industry policies that favor domestic growth, all of which could provide more stimulus to the U.S. economy and be bullish for risk assets.'

Kurt Reiman, Head of Fixed Income for the Americas and Director of Election Analysis at UBS Group, said, 'With the arrival of the next Congress and administration, the U.S. economy is in good shape, and as uncertainties fade, the stock market also reflects this.'

Bearish risks also exist.

But as U.S. stocks rise, many analysts also caution that Trump's return brings not only bullish news.

Citigroup's Petit mentioned that while U.S. stocks are rising, the bearish side also exists: 'As we truly think about what is happening outside the stock market today - interest rates will rise. Long term, if rates continue to rise, we believe this will constrain the fair value of the stock market, including small caps.'

'Currently, the market's reaction is logical, but what I want to say is that the market is reflecting more bullish news than negative news.'

David Kelly, Chief Global Strategist at JPMorgan Asset Management, also stated, 'If Trump is able to fully implement his agenda, it means deficits will increase, taxes will decrease, and due to tariffs, inflation will also rise. Rising inflation and increased deficits should push up long-term interest rates.'

Nomura Securities economists predict that after Trump's return, "We now expect the Fed to only cut interest rates once in 2025, and then keep the policy rate unchanged until the actual inflation impact of tariffs subsides."

The Federal Reserve will announce its latest interest rate decision on Thursday. Currently, Wall Street analysts generally expect the Fed to lower the benchmark interest rate by 0.25 percentage points.