RBC sets uber-bullish 2,500 S&P 500 target for 2017, sees earnings reaccelerating under Trump

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The recent stock market rally on hopes for pro-growth economic policies under President-elect Donald Trump is just a small hint of what lies ahead as the will rally 14 percent in 2017 from current levels, according to RBC Capital Markets, which on Monday released its investment playbook for next year.

"While the market's recent rotation might seem abrupt, the S&P 500 is up only 3 percent since Election Day, leaving it with substantial potential upside," RBC's chief equity strategist, Jonathan Golub, wrote in a note to clients, setting a 2,500 year-end price target for the index.

The bullishness stems from the economic policies likely implemented by Trump such as a reduction in corporate taxes to 15 percent from 35 percent, along with other fiscal measures, which in turn could flood S&P companies with cash, and spark a wave of buybacks, mergers and acquisitions, and earnings growth, according to the firm.