Trump vs. Powell: Who Will Drive the Stock Market as the Fed Kicks Off 2025?

As the stock market braces for the Federal Reserve's first meeting of the year, investors are left wondering who will have a more significant impact on market performance: President-elect Donald Trump or Fed Chair Jerome Powell. With the inauguration just days away, both figures have been making headlines, and their policies could shape the market's trajectory in 2025.



Trump's policy promises and their potential impact on the stock market have been in focus ahead of his inauguration on January 20. Equities rallied hard in an immediate reaction to Trump's win last November, as the outcome provided much-needed political clarity. The removal of election uncertainty, coupled with hopes for a pro-business environment under the new administration, boosted investor sentiment and contributed to market gains. However, momentum stalled to start the new year, and a challenging macroeconomic backdrop could hint at continued technical troubles.



Meanwhile, Powell has been making headlines with his recent testimony before Congress. In his semiannual monetary policy report, Powell acknowledged progress in reducing inflation but noted that more data is needed to ensure a sustainable decline. He also pointed out that the job market has "cooled considerably" and that the economy's growth has moderated. This shift in emphasis away from the Fed's single-minded fight against inflation suggests that it is moving closer to cutting interest rates, which could boost investor sentiment and drive stock prices higher.



Investors will be parsing Powell's every word for signals about potential rate hikes or cuts, as his statements have historically moved the market. If Powell suggests that the Fed is moving closer to cutting rates, the market may react positively. However, if he indicates that the Fed is still focused on fighting inflation, the market may react negatively.

In conclusion, as the Fed kicks off 2025 with its first meeting of the year, investors are left wondering who will have a more significant impact on the stock market: President-elect Donald Trump or Fed Chair Jerome Powell. While Trump's policy promises and their potential impact on the market have been in focus, Powell's recent testimony and his influence on market movements suggest that his decisions will play a crucial role in shaping the market's trajectory in the coming months. As the Fed considers its next move, investors will be closely watching for any hints about potential rate hikes or cuts, as these decisions could significantly impact the stock market's performance in 2025.