Greater progress by US president Donald Trump on key policy areas could help extend the rally in equities, according to several fund managers and analysts, as the bull run shows few signs of running out of steam.
The US equity bull market is entering its ninth year amid strengthening economy and lower unemployment, despite some questioning how much room there is for further growth.
Trump has been keen to highlight the growth in markets under his administration and the positive effect it has had on the economy.
He wrote on social media platform Twitter earlier this year: 
Indeed, since Trump was inaugurated the S&P 500 has risen by 24.93 per cent in US dollar terms, as the below chart shows.
Performance of S&P 500 since Trump inauguration
Source: FE Analytics
However, as the bull run in US equities has continued managers have become increasingly anxious about any potential correction.
“As the current economic expansion approaches its ninth anniversary, some investors have expressed concern a recession is likely sometime soon – as the current expansion has already lasted more than twice as long as historical averages,” said Ed Cowart, manager of the $908.8m offshore Nordea 1 North American All Cap fund. “We do not share this concern.”
He explained: “There is a natural tendency toward growth in the US economy. Expansions do not die of old age, but rather because of policy actions or major exogenous events.
“We believe current policies are supportive of continued growth. In particular, on the fiscal and regulatory fronts, policies are becoming even more conducive to growth.”
While the US president suffered an early setback as his proposed healthcare reforms failed to garner support, he won backing for ambitious tax reforms at the end of last year that have been positively received by the market.
Mark Sherlock (pictured), head of US equities at Hermes Investment Management, said while the start to Trump’s presidency was characterised by “failures and frustrations” there had been successes for the Republican more recently. 
“A reduction in both the corporate and personal tax rates will act as a considerable near‐term catalyst to both the economy and the market,” he said.
“On the corporate side, reducing the tax rate from 35 per cent to 21 per cent should boost market and economic growth with benefits being particularly enjoyed by high taxpayers (banks) and domestically focused businesses.”
“By some estimates, that could add about 10 per cent to S&P 500 earnings next year,” added Nordea’s Cowart. “In addition, favourable terms for repatriation of the $2‐3trn in US company cash stranded overseas is likely.
“That, in turn, could unleash a number of favourable actions for the US economy and for shareholders.”
As the first significant tax reform since the 1980s, Trump’s move comes at a time when monetary stimulus through the Federal Reserve’s bond-buying programme has begun to wind down.
“The fiscal stimulus comes at a time where we have monetary tightening from the Federal Reserve combined with a global upturn in growth and trade volumes,” said Samed Hysa, macro analyst at Ashburton Investments.
“This mix will mean the full effects of the reform will take months to play out, but US markets priced in the tax cuts throughout 2017.”
Consumer spending should also be positively affected by cuts to personal income tax, said the analyst, although these will be skewed towards higher income taxpayers.
Hysa also noted that the unfunded tax reforms are likely to have some positive and possibly negative consequences.
“The additional impulse to investment kicks in with a lag around mid‐2018, with the 100 per cent expensing of capital investments encouraging a frontloaded approach,” he said.
“Disincentives from other areas of the package, such as discouraging the use of debt financing relative to equity financing, could limit any large increases in investments that the administration hoped for.”
The analyst said while there was “cause for optimism” in the near term over tax reform, “questions remain of whether the package will come at the cost of substituting a burst of short‐term additional growth in a late cycle economy, while, simultaneously removing an option which would have helped tackle any slow‐down in the future”.
Another area that the Trump administration has moved on is regulation and a move towards more business-friendly regime that some had accused former president Barack Obama of neglecting.
Hermes’ Sherlock, who is lead manager of the Hermes US SMID Equity and Hermes US All Cap Equity funds, said the deregulatory agenda of the new administration had boosted the economy.
He said: “Businesses are also benefitting from a determined effort by the Trump administration to roll back punitive regulatory restrictions imposed under previous administrations.”
Indeed, the US financial sector – and the banking industry, in particular – could be one of the beneficiaries of deregulation. Banks have faced more stringent rules as the previous administration sought to prevent recreating the same environment that led to the financial crisis.
As the below chart shows, the S&P 500 Financials (Sector) index has rallied strongly since Trump’s inauguration, rising by 29.66 per cent.
Performance of index since Trump inauguration
Source: FE Analytics
More progress may also be made in Trump’s plans to increase infrastructure, which has so far taken a backseat to the administration’s other policies.
Increased infrastructure spending was also among key promises made during Trump’s presidential election campaign and having won support for tax reform, he may now move on to the next policy area.
“Infrastructure stimulus appears to be the next big push for Trump’s administration,” said Hermes’ Sherlock. “A $1trn plan is mooted, comprising $200bn of federal funds with the remainder coming from cities, states and private investment.
“A significant program, in whatever form it takes, will be stimulative to the economy, creating jobs and benefitting a wide range of businesses [such as] construction, materials, services.”
Ashburton Investments’ Hysa added: “The infrastructure plan will need a bipartisan agreement, and the administration will need to decide whether it moves to focus more aggressively on the trade front, given the limited actions up to now.”
However, while Sherlock remains bullish about the US market, he said there are also several “risks and unknowns” such as a spike in inflation, monetary tightening or geopolitical tensions “all of which could swiftly unravel the status quo”.