Trump's anticipated stimulus measures ahead of the midterm elections have led Wall Street to bet on a rise in cyclical stocks.

According to Mars Finance, on January 13th, with the US midterm elections approaching, Wall Street is interpreting Trump's recent series of economic statements as "broad growth-promoting signals," betting that he will fully stimulate the economy and consumption before November, thus benefiting cyclical assets. Market analysts point out that from continuous calls for interest rate cuts to proposing ideas such as capping credit card interest rates, the Trump administration's core objective is to maintain economic activity and affordability. Investment banks generally believe that this policy orientation is more beneficial to cyclical sectors such as industry, raw materials, and non-essential consumer goods, rather than defensive stocks. Raymond James stated in its latest report that against the backdrop of strong monetary and fiscal policy expectations and Trump's frequent release of growth-promoting signals, the market is unlikely to bet on the failure of the cyclical economic recovery. UBS also pointed out that the relevant policies are more election-oriented, and voters' core focus remains on prices, housing, gasoline, and interest rate levels. Although Trump's proposed credit card interest rate cap initially pressured bank stocks, UBS believes that even if the policy is implemented, it may be temporary and have limited coverage, with a manageable long-term impact on the financial sector, and views any pullback in bank stocks as a buying opportunity. JPMorgan Chase also favors cyclical stocks, predicting that slower inflation will create room for further economic stimulus in 2026, driving economically sensitive sectors to outperform the broader market. However, from an index perspective, the S&P 500 is approaching the 7,000-point mark, and historical experience shows that the market often experiences consolidation before breaking through important psychological levels. BTIG points out that in the past five attempts to break through the 1,000-point mark, four resulted in a period of pullback. Overall, market sentiment may fluctuate in the short term due to policy uncertainty and the earnings season, but most institutions still believe that cyclical stocks are likely to become a key driver of this market rally, supported by growth expectations and improved corporate earnings.