Deutsche Bank strategist David Bianco told investors the market will rally into year-end after any post-election sell-off due to the likelihood of a pro-growth Republican agenda, CNBC reported.
"We think the message of this election is that America demands stronger economic growth. ... A Republican Congress and president is likely to reduce regulation, cut corporate taxes just enough to be globally competitive and bring cash offshore home," Bianco wrote in a note to clients Wednesday.
"The stock market should be fine. ... We think the stock market sell-off will be short-lived. We think this apparent Republican sweep is positive for the broad market and especially healthcare stocks."
And it appears that after the initial shock wore off and the new reality settled in, maybe stocks won't plunge as some pundits had predicted in case of a Trump victory.
For his part, one prominent Wall Street prognosticator is keeping his year-end S&P 500 Index target unchanged, Bloomberg reported.
David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc., sees the benchmark gauge ending 2016 at 2,100, just 1.8 percent below Tuesday’s close and less than half a percent from where futures indicate the index will open on Wednesday. His forecast, tied for second most-bearish in a Bloomberg strategist survey, envisions limited fallout from a Trump presidency and says stocks are likely to resume their ascent in coming years.
“We expect the equity market response to the election result will be limited,” Kostin wrote in a client note on Wednesday. “The U.S. economy has been expanding for seven years and continues to grow at a subdued pace. We expect the U.S. stock market will climb slowly during the next few years in line with earnings growth.”
Another strategist, Tom Lee of Fundstrat Global Advisors, predicted the S&P 500 will rally about 7 percent from where it’s poised to open Wednesday through the end of the year. Lee cut his year-end forecast by 100 points to 2,225 but said the Republican sweep of Congress and the executive branch should benefit economic growth and prevent the Federal Reserve from tightening.
“Unpopular presidents do not equate to bad economic and stock market outcomes,” Lee wrote in a note to clients Wednesday. “This is restoring some ballast to the political system. The Fed is likely on hold in December and USD weakening is easing financial conditions. Both should be perceived as short-term positives by investors.”
U.S. stocks rallied on Wednesday, in a dramatic rebound from overnight losses fueled by the stunning victory of Trump as investors snapped up stocks in sectors that appeared poised to benefit from the policies of a Trump presidency, Reuters reported.
"At this point it is almost a Rorschach picture. If you want to be positive you can say at face value his policies are reflationary and less regulation," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in New York.
"The sectors that benefit from that would be in terms of reflation, it is going to be financials, and less regulation it is going to be healthcare and financials."
(Newsmax wire services contributed to this report).
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