The stock market emerged as a clear winner after the election of Donald Trump as the President of the USA. Despite the ambiguity regarding Trump’s plans for economic growth, the stock market has been gaining steadily. Trump’s proposal for tax reforms, deregulation, and infrastructure spending has pushed DOW Jones index to a new high. Just a few weeks ago, DOW Jones reached its most coveted 20,000 mark. Following Trump’s speech addressing the Congress, the DOW Jones index has reached an all-time high of 21,000.
The rise to 21,000 from 20000 is rapid and it is the biggest increase since 1999. For the past 12 sessions, the DOW index has been setting record highs as it continued to climb. The index increased by 1.46% in a single day, registering its largest daily gain for this year. The index has been enjoying an upward trend continuously for the past 4 months, gaining 15% in this time period. February proved to be the best month for DOW index in five years.
Apple is the best performer gaining 14.7% due to the rise in the index points. It contributed to 122.65 points. Goldman Sachs and Boeing also contributed more than 100 points, pushing Dow index to an all-time high. In total, Goldman contributed 167 points in the past one year. Chevron, Exxon Mobil, and Intel were the worst performers during this time.
The deregulation proposal has increased the optimistic views of investors. They are excited about tax reforms and deregulation. Among the various stocks, the stocks of financial firms gained the most. American Express and JP Morgan Chase emerged as clear winners gaining more than 2.3%.
Many experts are of the opinion that the rally is propelled by the speech made by Donald Trump which had a positive tone. Even though he didn’t elaborate on the specifics of the deregulation and tax reform policies, the stock market picked up as a result of the promising speech. The market was initially fearful that the President may not be able to pass the agenda. However, the Presidential address to the congress made it clear that Trump is on track with his plans to execute the promises of his campaign.
The S&P 500 index also gained 0.87% and Nasdaq increased by 0.83%. Economists agree that implementing these plans will take a long time. However, knowing that the President is keen on drafting plans to execute his promises has encouraged the investors. Trump strongly condemns taking jobs away from the United States and his policies focus on improving the domestic economy.
It is also expected that the Fed will increase the interest rates in March. Even though it will make it expensive to borrow money to buy more stocks, the investors are happy about the proposed rate hike. The actual rate of interest is not relevant because a rate increase signals the confidence of the Federal Reserve in the economic expansion. When the Fed is confident that the economy will get past the stagnation, the investors will be hopeful too.