Stocks are again on the cusp of all-time highs, and still have room to run

Don't look now, but record highs are back within Wall Street's reach. The S & P 500 ended Tuesday's session less than 1% below an all-time high reached in December. The Dow Jones Industrial Average and Nasdaq Composite are about 2% below their respective records. This comes as animal spirits gain new life on the Street, with President Donald Trump kicking off his second term with dozens of executive orders — raising expectations for deregulation and lower corporate taxes. To be sure, the specter of trade barriers is back in the market, with Trump floating the idea of heavy tariffs on key partners such as Canada, Mexico and China . Stocks will likely be volatile as more details on potential tariffs are released. Still, many strategists think the path of least resistance for equity prices is to the upside. .SPX .DJI,.IXIC 1Y mountain Major averages in past year "We continue to expect near-term volatility as markets react to incoming Trump headlines, and see negative impact on targeted regions if the tariffs are followed through," Solita Marcelli, chief investment officer for the Americas at UBS' global wealth management division, said in a note. "But we also believe U.S. equities have room to grind higher as growth momentum continues." "Along with the tariff plans against China and the EU, Trump on Tuesday also announced a private sector investment of up to $500 billion to fund AI infrastructure, led by a joint venture between OpenAI, SoftBank , and Oracle called Stargate," Marcelli added. "We view the latest announcement as another positive catalyst to the AI growth story." Oracle and Nvidia were headed for a second day of gains on the back of the Stargate announcement. The former traded 10% higher in the premarket, while the latter added 3%, leading other tech names higher and boosting S & P 500 futures. Craig Johnson, chief market technician at Piper Sandler, also sees strong gains ahead. "Last week, the equity markets experienced a broad rally, supported by cooler inflation data, upbeat earnings from banks, and a recovery from short-term oversold conditions and negative sentiment," Johnson said. "We expect further upside in equities, particularly SMID-caps, supported by the return of Trump's 'business and investor-friendly' policies." Johnson sees the S & P 500 ending the year at 6,600, or 9% above Tuesday's close. Elsewhere Wednesday morning on Wall Street, Wells Fargo upgraded Charles Schwab to overweight from equal weight following an earnings beat. "Our call on SCHW had been that the bull/bear debate would keep shares range bound," wrote Wells Fargo. "Following a solid print and call, the bear case is weaker, and we expect the bull case to prevail. In 2025, we see continued and operating margin expansion, continued balance sheet & capital improvement w/return of buybacks, and better organic growth."