The stock market has never looked like this before — regardless of who's president

Published On Jan 19, 2025, 9:00 AM

The U.S. stock market is in a unique position as President-elect Donald Trump prepares for his second term. The S&P 500 has recorded two consecutive years of over 20% gains, a rarity since the late 90s, largely driven by the Federal Reserve's interest rate cuts and strong corporate earnings growth. However, the market is highly concentrated, with the top 10 stocks comprising nearly 40% of the index. Although this concentration has fueled the rally, it also poses risks. Valuations are high compared to historical averages, raising concerns about future performance, particularly with uncertainties surrounding upcoming economic policies. Analysts suggest that even slight changes in financial conditions could significantly impact market sentiment, especially if inflation concerns resurface.