Zhi Tong Cai Jing·2025-11-03 01:45Core Viewpoint - The stock market has surged 18% since Donald Trump's election victory, reaching a historical high, driven primarily by the AI boom rather than the anticipated tax cuts and deregulation [1][5]. Group 1: Market Performance - The S&P 500 index has recorded six consecutive months of gains, with significant contributions from large tech companies, which accounted for over half of the market's increase [1]. - Excluding market-cap weighted versions, the equal-weighted S&P 500 has only risen 5.2%, and the median stock has seen a mere 1.2% increase [1]. - The current market performance ranks eighth among the past eighty years of presidential election year performances, trailing behind previous administrations [8]. Group 2: Impact of AI - The AI surge has led to significant market capitalization milestones, with Nvidia becoming the first company to surpass $5 trillion, while Apple and Google crossed the $4 trillion mark [4]. - Investors perceive AI as entering a "leap to a higher stage," prompting a shift in investment strategies towards AI-related companies [4]. Group 3: Trade Policy and Market Volatility - Trump's aggressive trade policy has introduced unprecedented uncertainty, with a policy uncertainty index reaching its highest level since 1900 [1]. - The volatility in the market has been exacerbated by Trump's public pressure on the Federal Reserve and attempts to influence its officials [4]. Group 4: Sector Performance - Consumer stocks have shown weakness, with notable declines in companies like Chipotle, and the consumer staples sector has faced profit margin erosion due to tariffs [8]. - The materials sector has performed the worst, down 8%, as companies face higher costs for imported chemical materials [8]. Group 5: Investor Sentiment and Risks - Despite the AI-driven optimism, concerns about potential market bubbles persist, and the impact of tariffs on consumers may increase in the future [9]. - Investors are currently navigating dual risks: high valuations that may correct and the fear of missing out on further AI stock gains [9].