Optimism about pro-growth policies and lower taxes fuel a Trump bump for U.S. markets during President Donald Trump’s first 100 days in office.
NEW YORK, NEW YORK, UNITED STATES (REUTERS) – As U.S. President Donald Trump nears a milestone 100 days in office, the U.S. stock markets have experienced record-breaking growth since Trump’s inauguration.
The Nasdaq closed above 6,000 for the first time on Tuesday (April 25), more than 17 years after first breaching 5,000.
Back on March 1, the Dow blasted through the 21,000 mark and on February 13, the S&P 500 has crossed $20 trillion (USD) in market value for the first time ever.
Many strategists have attributed the stock market rally since Donald Trump’s victory over Hillary Clinton in the Nov. 8 U.S. presidential election to optimism Trump would boost the domestic economy through tax cuts and an infrastructure spending binge.
“I think what’s really behind that is more of President Trump’s pro-business mentality. It seems that investors feel very confident that our economy is going to improve. They feel confident that individual businesses will be able to run smoother, have a little bit less regulations sitting on top of them,” said Jonathan Corpina, senior managing partner at Meridian Equity Partners in New York.
“When you are looking at overall some of the plans and ideas that he has out there as far as infrastructure spending, buy America, jobs in America, keep jobs here, I think all that wrapped together has given investors the confidence that we’ve seen translate into this market move higher and higher.”
When Trump was elected in November, Republican lawmakers enthusiastically joined his call to rewrite the tax code and dismantle Obamacare in the first 100 days of his presidency.
Trump’s attempt to roll back Obamacare ended in an embarrassing collapse in Congress in March, leading the financial markets to reassess expectations of fast action on taxes that have helped fuel a Trump stocks rally.
“We do also understand that everything that President Trump has run on and all the plans and ideas and initiatives that he wants to put into place, not everything is going to happen. That would be a little bit foolish to think that everything he said throughout the entire campaign he’s going to be able to get done,” said Corpina.
“I think there has to be some self-management of expectations as far as what he wants to do and what he can actually get done under the current political structure that we have here.”
Meantime, just days before the president marks his 100th day in office on Saturday, Trump on Wednesday (April 26) proposed deep tax cuts for many businesses, but the one-page tax plan offered no detail on how it would be paid for without increasing the deficit.
Also while negotiating a spending bill earlier this week, Trump backed off his demand that the bill include money for the “big, beautiful, powerful wall” he wants to build along the U.S.-Mexican border which was one of his signature campaign proposals.
As corporate earnings helped power market valuations to their highest levels, other geo-political events have caused uncertainty in the markets, leading some market analysts to caution that the first 100 days have little to do with the next 100 days or beyond.
“The 100 days is just a marker that people can start to look at a gauge. He’s been there 100 days, the honeymoon period is over. He knows what’s on his plate,” said Corpina.
“But the things that are on his plate today might change overnight tomorrow as far as some issues that he has to address. There’s clearly a lot of uncertainty out there as far as some geo-political issues. We’re continually talking about ISIS. We’re continually talking about North Korea, interactions and relationships with China. So all this continues to make every day quite different from the last one before.
President Trump entered office in January with low unemployment rate of 4.8 percent, according to the U.S. Department of Labor and a strong economic environment.
“Let’s be honest, we’re in the camp that he took over one of the better economies that a president has seen in 20 or 30 years,” said Ryan Detrick, senior market strategist at LPL Financial.
“So with earnings expected to be up 11 percent year over year in the first quarter, is that truly because of Trump? The answer is probably no, absolutely not. But again, he hasn’t really rocked the boat at all. And that’s probably more of a positive than a negative. So, still things look pretty good to us from a bigger picture point of view.”
To gauge the Trump bump, since the day before Trump’s inauguration, the S&P 500 Index has gained 5 percent and the Dow Jones Industrial Average is up 6 percent. They’ve added around 15 percent and 17 percent, respectively, since the day before November’s election, again reflecting broad optimism about the prospects for lower taxes, deregulation and higher economic growth.
Historically, the Trump bump will rank among the best 100 days for a Republican president. Only George H.W. Bush saw a bigger S&P 500 increase in 1989 during his first 100 days with 8.03 percent.
However, during the first 100 days of President Barack Obama, the Democrat saw a S&P 500 increase of 8.39 percent in 2009 and 6.51 percent in 2013.