What Will Happen With the Stock Market if Trump Reshapes the Fed?

Jefferies chief market strategist David Zervos believes an upcoming power shift at the Federal Reserve could benefit U.S. equity markets.

Speaking on CNBC’s Power Lunch, Zervos suggested that a reshaped Fed under President Donald Trump may lean toward lower interest rates, supporting risk assets.

With Jerome Powell’s term ending in spring 2025, Zervos noted that Trump could appoint two or more new Fed members. If so, four of seven board seats would be Trump-appointed, potentially aligning monetary policy with a pro-growth strategy.

“A Trump-influenced Fed would likely push for easier policy,” said Zervos. “That’s typically bullish for stocks.”

Lower Rates Could Fuel Tech and Growth Rally

Zervos compared this scenario to the Greenspan-era policies of the 1990s, where bold rate cuts supported markets.

“The risks Greenspan took eventually paid off,” he said. “A new Fed chair may follow the same playbook.”
Such a move could especially benefit technology stocks and growth sectors, both of which are highly sensitive to rate changes.

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Markets Begin Looking Beyond Powell

Zervos also observed that investor interest in Powell’s speeches is fading. Despite the Fed chair’s recent signal of a potential rate hike, markets showed little reaction.

“The focus has clearly shifted to what Trump might do,” Zervos added.

He said Powell may be gradually losing influence, suggesting that Trump could be quietly sidelining the Fed chair. However, Zervos acknowledged that markets are not yet pricing in any specific successor and view potential appointees as unknowns for now.

While uncertainty remains over who will lead the Fed next, Zervos emphasized that the broader expectation of easier policy under Trump could already be creating a more favorable climate for equities.

Kosta Gushterov

Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.