TRUMP INSPIRES DOW TO 21,000
Stocks crack another record after speech’s tone soothes investors
The Trump Rally is back on again. Wall Street didn’t get the nitty- gritty details it wanted on policies such as taxes and trade from President Trump’s speech to Congress Tuesday night, but the commander in chief ’s “presidential” tone set investors at ease, and they pushed the Dow up more than 300 points to a record- setting close above 21,000.
Investors took Trump’s measured and positive demeanor as a sign that he will have a better chance of getting his economic agenda through Congress.
“Trump’s speech was upbeat, all- inclusive and presidential,” says Bruce Bittles, chief investment strategist at Baird. “We have a leader, and that is what all the excitement is about.”
In his address to a joint session of lawmakers, Trump reiterated his push for “historic tax reform” that would put American businesses on a level playing field with foreign competitors, repeated his calls for a $ 1 trillion infrastructure spending plan and noted that his administration has “undertaken a historic effort to massively reduce job- crushing regulations.” The president repeated his promise to repeal and replace Obamacare.
Wall Street was also listening for the things Trump didn’t say. He didn’t echo recent attacks on the media, complain about fake news or mention spats with celebrities and other “off- message” topics.
“What matters is if he can show the leadership necessary to push his plan through Congress. The odds of success improved significantly last night because his speech was expertly crafted, and he stayed on script,” says Alan Skrainka, chief investment officer at Cornerstone Wealth Management.
Investors have pocketed a tidy sum — at least on paper — in the Trump era. Since his inauguration, market gains, as measured by the Wilshire 5000 Total Market Index, have amounted to $ 1.3 trillion and $ 3.2 trillion in paper wealth since election day.
Wall Street grabbed on to Trump’s conciliatory and upbeat message, such as his call for a “renewal of the American spirit” and his promise that “dying industries will come roaring back.”
Trump’s pledge to work with Democrats raised hopes that his agenda will have a better chance of being implemented.
“I think investors were set up for hearing a real negative speech, which is more indicative of Trump’s style,” says Wayne Wicker, chief investment officer at ICMA- RC. “Just having a positive tone suggests to investors that his fiscal policies might have a better opportunity to move forward.”
There are still risks, notes Greg Valliere, chief strategist at Horizon Investments. “Despite the mature demeanor, the markets are still leery that Trump’s agenda could stall if the divided congressional Republicans can’t agree on an Obamacare replacement,” Valliere says.