President Trump’s call that the S&P 500 (^GSPC) will see another massive rally is starting to look fuzzy.
“If you get double the stock market, it really will reflect the economy doubling,” Ben Emons, founder and CIO of FedWatch Advisors, told Yahoo Finance’s Opening Bid.
Emons warned that for the market to deliver another year of outsized, double-digit gains, the US economy would effectively need to catch fire.
Trump sees the market’s future differently. At the Davos World Economic Forum this week, he described the market’s recent dip as “peanuts,” blaming the blimp on “Iceland,” though it is likely he meant Greenland.
“We have an unbelievable future in that stock [market]. That stock market is going to be doubled,” he said, referring to the Dow Jones Industrial Average (^DJI). “We’re going to hit 50,000, and that stock market is going to double in a relatively short period of time because of everything that’s happening.”
Emons, however, says such a move will depend on critical factors. “Doubling the stock market … would mean if you’re getting higher GDP, say 5% or higher, then interest rates are going to reflect that, and it’s likely going to be a little bit higher,” he said.
The skepticism comes just as the Bureau of Economic Analysis confirmed a robust 4.4% gross domestic product (GDP) print for the third quarter. While that headline number suggests a booming economy, it has also pushed the 10-year Treasury (^TNX) yield to a critical breakout point of 4.24%.
In early 2026, the 10-year yield is acting as a linchpin for the market. When it rises, it makes future corporate profits less valuable today and increases borrowing costs for everything from mortgages to credit cards.
That puts the economy in a precarious position. If GDP remains at these elevated levels — or hits the 5% mark some bulls are dreaming of — the Federal Reserve will have almost no incentive to continue cutting interest rates.
“The Fed may stay on hold for a bit,” Emons suggested. The 10-year yield’s recent climb suggests the bond market is already betting that the Fed will stay on hold for much longer than investors originally hoped.
This creates a distinct speed limit for the S&P 500. For the market to truly “double” from here, Emons says that it would require a rare combination of strong growth and low interest rates, otherwise known as a Goldilocks scenario. Historically, these periods are not only rare but generally temporary.
As Emons pointed out, the current yield breakout is “reflecting the stock market and the GDP expanding.” But the more the economy grows, the higher the return on bonds becomes. The competition for capital is precisely why the “noise” surrounding the administration — including recent headlines about a potential purchase of Greenland — is increasingly being ignored by bond traders.
They are focused on the 5.4% GDP estimate for the fourth quarter from the Atlanta Fed. While the administration might want to shoot for record-breaking growth, the market is beginning to realize that such growth comes at a price. In short, it creates a tough environment for stock market performance, particularly for growth stocks that rely on low-cost financing to fuel expansion.
Francisco Velasquez is a Reporter at Yahoo Finance. Follow him on LinkedIn, X, and Instagram. Story tips? Email him at francisco.velasquez@yahooinc.com.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance