Trump stock rally mostly benefiting the best-off

NEW YORK: As the Dow nears 20,000 amid a Trump rally, longtime financial insiders see a difference compared with prior Wall Street landmarks: very little interest from the general public.

Other milestones, such as when the Dow hit 10,000 in 1999, were accompanied by wide public discussion and celebration in the national media and at cocktail parties.

“You’re not seeing that now,” said JJ Kinahan, chief market strategic at TD Ameritrade. “At that time, it was almost pure euphoria at everything going on in the market.”

The difference in mood reflects the fact that, compared with past bull markets, the average American is less invested in the stock market and therefore not privy to - or a beneficiary of - the impressive gains in the Dow since election day.

“You’ve got to have money to be in the market in the first place and if you have been in the market, you’ve done extraordinarily well,” said Benn Steil, director of international economics at the Council on Foreign Relations.

“This is part and parcel of the wider of issue of inequality.”

Participation in the stock market fell to an all-time low of 52 per cent in 2016 from a peak of 65 per cent in 2007, according to a Gallup survey released in April.

Gallup attributed the drop to the Great Recession which dented the public’s ability to invest, as well as its confidence in the stock market as a worthwhile place to put funds.

The biggest hit was in the middle class, those with earnings between US$30,000 and US$75,000, whose participation plummeted to 50 per cent from 72 per cent.

“Fewer Ame r i c a n s - particularly those in middleincome families - are benefiting from the recent gains in stock values than would have been the case a decade ago,” Gallup said.

Low-income Americans are even less invested. Americans making less than US$ 50,000 represent 51 per cent of the population, but make up just 25 per cent of the investor population, according to a report by the Financial Industry Regulatory Authority.

The Dow’s flirtation with 20,000 marks the latest psychological milestone in the multi-year bull market since the index bottomed out in September 2009 at under 6,600 points.

The latest rally was spurred by the Republican sweep on election day which brought with it expectations for tax cuts, regulatory reform and massive public works investment expected to boost the economy and corporate profitability. — AFP