Good morning investors. With the election behind us and holidays around the corner, Wall Street is now focused on how to position for 2025.

Shortened trading week ahead for Thanksgiving — let’s dive in.

Today’s letter is brought to you by Public!

More Fed rate cuts are coming. You still have time to lock in a market-leading 7%* bond yield with Public.com.

Learn more.

Only up from here?

Despite concerns about an inflation rebound and tariffs, a flurry of new forecasts suggests Wall Street is optimistic for what’s to come under the second Trump administration.

Indeed, economic growth remains robust, a recession has yet to materialize and stocks are enjoying a banner year. 

“While the outlook under Trump 2.0 involves a lot of moving parts, we don’t see the net effects of his policies jeopardizing the Roaring 2020’s continuation,” said veteran strategist Ed Yardeni, who assigns a 55% probability to this upbeat outlook. 

With an S&P 500 target of 7,000 by the end of 2025, Yardeni’s team maintains one of the most bullish outlooks on Wall Street.

That’s 17.28% above the index’s Friday closing price of 5,969.

Here are other firms’ forecasts for next year, as well as the percent change from current levels:

• Goldman Sachs: 6,500 (+8.89%)

• Morgan Stanley: 6,500 (+8.89%)

• UBS: 6,600 (+10.57%)

• Evercore: 6,600 (+10.57%)

• BMO Capital Markets: 6,700 (+12.25%)

• DataTrek Research: 6,840 (+14.59%)

Historically, stocks tend to go up during post-election years.

The benchmark index has climbed following nine of the last 10 elections, securing an average gain of 15.2%, data from Carson Research shows.

That’s a higher return than all of the above forecasts except for Yardeni’s.  

What’s unusual this time, though, is that the S&P 500 is about to enter January with back-to-back annual gains above 20% for the first time in over two decades. 

In a note Sunday, Morgan Stanley chief US equity strategist Mike Wilson said his recent conversations with clients reflect an underlying belief that US names are the best place for stock investors for the year ahead

“Despite the S&P 500’s near-record-high valuations,” Wilson said, “the consensus view remains that they are justified by the also-high [return on equity] and better growth profile — the definition of high quality.” 

Everyday Americans also anticipate a good year for stocks. The latest Consumer Confidence survey showed 51.4% of respondents expect equities to rise in the year ahead — the highest reading since the question was first asked in 1987. 

Meanwhile, some investors have already pointed to Trump’s nomination of Scott Bessent for Treasury Secretary as one outside reason to stay bullish.

Bessent is well-respected among markets folks, and over the last several decades he’s worked alongside Wall Street titans like George Soros, Stanley Druckenmiller and Jim Chanos. 

Market history fluctuates a lot

Dating back to 1928, the S&P 500 has averaged an annual return of 11.7%. 

That figure, however, comes with a standard deviation of 19.6 percentage points, which means a typical year can range between a 7.8% decline and a 31.2% gain, according to DataTrek Research. 

This suggests that asking to pinpoint where stocks might land at some point may not be the right question.

Sam Ro, who writes the excellent financial newsletter TKer, says it’s better to dedicate that energy elsewhere.

“It is…much more helpful to be aware of the fundamentals driving earnings because earnings are the most important long-term driver of stock prices,” Ro wrote in a note Sunday.

“If the prospects for earnings growth are attractive, then it’s probably not crazy to think stock prices will head in that direction.”

Comments or feedback? Reply directly to this email or let me know on X @philrosenn.

Elsewhere:

💵 Bond traders see Scott Bessent as a safe pick, according to one strategist from Societe Generale. He gives markets a veteran voice in Washington. The Treasury Secretary nominee has advocated for the US to grow its way out of debt and to layer in tariffs “gradually.” (Reuters)

📈War concerns haven’t derailed stocks. The threat of nuclear conflict seems higher than it has in ages, but equities have not halted their march higher. In recent days, reports have emerged that Russia has launched ICBMs at Ukraine. While nuclear warheads were not used in this case, those weapons have the capacity to carry them. (Barron’s)

Rapid-fire:

• Bitcoin still hasn’t quite cleared the $100,000 milestone yet (Bloomberg)

• “Wicked” and “Gladiator” combined for $270 million in worldwide movie ticket sales in one of the busiest movie weekends of the year (AP)

• More brokerages want to transition to 24-hour stock trading (WSJ)

• Anthony Pompliano makes the case why crypto-related public companies are still undervalued (Pomp Letter)

• State Street’s chief gold strategist warned that bitcoin’s rally is generating a false sense of security among investors (CNBC)

Last thing:

Interested in advertising in Opening Bell Daily? Email [email protected]