‘Trump effect’ at work as Wall Street shatters records
Posted by News Express | 9 December 2016 | 1,851 times
Wall Street indexes have broken record after record in the month since businessman Donald Trump won the presidential election Nov. 8.
The so-called “Trump effect” has investors hyped about the president-elect’s promises and his “pro-growth” strategies that many hope will “make America [and its economy] great again”.
Investors were wary on election night when it became apparent Trump would become the country’s next president. Dow futures plunged 750 points, or 3.3 percent, as results came in.
The following day on Nov. 9 the stock market began with losses but managed to reverse the trend as investors soon came to terms with the result and focused on Trump’s economic promises.
Steve Goldman heads the Goldman Management trading firm and pointed to a number of policies Trump wants to implement to boost economic growth.
“The market was accelerated by those pro-growth strategies – lower corporate taxes, more spending on infrastructure,” Goldman told Anadolu Agency.
Trump campaigned on a promise to lower corporate taxes from 35 percent to 15 percent in an effort to create jobs and increase income and consumer spending to boost the economy.
He also promised $1 trillion to be spent on infrastructure that would raise government spending and add jobs to the economy.
With infrastructure spending expected to increase, the demand rose for stocks of major American investment banks – boosting their shares which triggered the early gains on Wall Street immediately after the election.
Shares of Wells Fargo jumped nearly 8 percent Nov. 10, Bank of America was up 4 percent, Goldman Sachs 4 percent and Citigroup and JP Morgan Chase saw increases of 4 percent and 3 percent, respectively.
The rally was on.
During the course of the next month, the Dow Jones industrial average gained 7 percent, from 18,321 points on Nov. 9 to 19,614 points Thursday, according to data compiled by Anadolu Agency.
The S&P 500 index increased from 2,136 points to 2,246 during the same period, marking a 5 percent rise.
And the Nasdaq posted a nearly 5 percent jump, from 5,175 to 5,417 points.
Between Nov. 9 and Dec. 8, the Dow broke its all-time highest closing record a whopping 12 times.
On Nov. 21, all three indexes closed at record levels for the first time since December 1999. The following day they again closed at record levels for a second consecutive day – a first since March 1998.
From Nov. 21 - 23, the Dow and the S&P also broke their individual closing high marks for three consecutive days.
Since Trump’s election, the S&P has recorded new high on six days, while the Nasdaq posted records on four days.
Goldman believes the rally will continue through the first quarter of 2017.
“It’s been eight years or longer that we had a pro-growth platform such as lower taxes for the consumer and corporations,” he said.
“And, there will be a unified government, with the Congress, the Senate, and the White House. All unified. That will make it easier to get pro-growth strategies approved,” he added.
Republicans will hold a majority in the Senate and the House of Representatives in the 115th Congress, allowing for Trump’s economic policies to be adopted a lot easier than with a divided balance of power. (Anadolu Agency)