Dow soars to finish over 21,000 for first time

Trump speech credited with helping extend rally

Wall Street didn’t get the nitty-gritty details it wanted on policies like tax reform and trade from President Donald Trump’s speech Tuesday night to Congress, 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 are taking Trump’s more measured and positive tone as a signal that he will have a better chance of getting his economic agenda through Congress.

Wednesday’s move above 21,000 came just 24 trading days after the index hit the 20,000 milestone. The last time the Dow closed up more than 300 points was Nov. 7, the day before the presidential election, when it jumped more than 371 points. On Tuesday, the Dow’s streak of 12 straight sessions of record highs was snapped with a 25-point decline.

Stocks gained across the board. The broad Standard & Poor’s 500 index rose 32.32, or 1.4 percent, to 2395.96, while the Nasdaq composite climbed 78.59, or 1.4 percent, to 5904.03. The Dow closed up 303 points, or 1.5 percent, at 21,115.55, while the smaller-company Russell 2,000 gained nearly 2 percent.

In his address to a joint session of Congress, Trump reiterated his push for “historic tax reform” that will 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.”

Wall Street grabbed onto Trump’s more 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 across the aisle with Democrats raised hopes on Wall Street that his agenda will now 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.”

Trump’s speech laid the groundwork for his push to get his legislation passed, says David Kotok, chief investment officer at Cumberland Advisors. Trump’s words might also have bought him some time with impatient investors.

“Wall Street is giving him more time after this speech — not a lot more, but some,” Kotok says. “Acting as an adult, he has pushed back the timeline of reaching a deal with Congress. The speech was his best ever as a president. It was salesmanship. Making the deal starts with selling it.”

Despite the good reception of Trump’s speech from Wall Street, there are still risks facing a stock market that has run up sharply since Election Day on hopes Trump will get his agenda passed, notes Greg Valliere, chief strategist at Horizon Investments.

“The markets saw a strong president, and they liked it,” Valliere says.