The stock market is on the verge of a major crash, fueled by a combination of key factors creating a more favorable environment for investors.

According to Yardeni Research, four factors could contribute to this surge, including the Federal Reserve’s long-awaited pivot on interest rates, the potential return of Donald Trump, a recent Supreme Court decision and strong corporate earnings.

1)’Fed Pivot: “The Federal Reserve’s change in monetary policy is at the forefront of this expected stock market rally, analysts say. With inflation showing signs of moderation and economic growth holding steady, the Fed is expected to begin cutting the federal funds rate. Recent data, including last week’s CPI and the latest retail sales report, confirm this trend.

“Fed Chairman Jerome Powell’s comments yesterday sealed the deal,” analysts said, underscoring market expectations for a 25 basis point rate cut in September, with a total of five such cuts expected next year.

This move is expected to reduce borrowing costs and boost market liquidity, driving share prices higher.

2)’Trump 2.0Recent developments in the political landscape also play a critical role in the market outlook.

Betting markets are now showing 2:1 odds in favor of former President Donald Trump winning the upcoming election, compared to a coin flip just two months ago. Investors are focusing on Trump’s ability to roll back low-tax policies and deregulation.

“For now, investors may be focused on Trump’s policy of low tax rates rather than his policy of high tariffs,” the analysts point out.

3)’DARKNESS Chevron (NYSE:) Ruling:’ The Supreme Court’s recent decision to limit Chevron’s ( CVX ) holding, which gave regulators significant power to interpret laws, is another critical factor.

According to analysts, this decision is expected to lead to a more business-friendly regulatory environment.

“Expectations for a more business-friendly regulatory regime are the boon that private markets have been waiting for,” the market research firm said.

This could lead to increased M&A activity, with companies such as Evercore and Lazard already enjoying significant share price gains in anticipation of increased M&A activity.

4)’Profits: Finally, the expected market crash could get an added boost if the ongoing second-quarter earnings season reveals a strong performance from corporate America.

The index hit a new record high, with the index climbing 0.9% in the week to July 17. The broader market is also benefiting, with the S&P 400 and S&P 600 up 3.1% and 5.0%, respectively.

Analysts point to the financials sector being the first to bear the brunt, seeing notable gains on the back of better-than-expected second-quarter earnings.

“The stock market rally is finally widening as investors expect lower interest rates to benefit many of the latecomers in the market rally.”

The market research firm has predicted a collapse if the Fed starts cutting interest rates, even if such a move was not absolutely necessary. While not advocating that scenario, the team is now concerned about when it could turn into a meltdown.

“For now, it’s still a happy bull market until the end.”