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article imageOp-Ed: Dow Jones sets new record above 21,000 after Trump speech

By Ken Hanly     Mar 1, 2017 in Business
Washington - The Dow Jones Industrial Average (DJI) the index of blue-chip US stocks closed above 21,000 for the first time ever. The DJI rose one thousand points in just 24 days equal to the previous record of May 1999 when it rose from 10,000 to 11,000.
Just a few weeks ago, the DJI took just 42 days to move from 19,000 to 20,000. Stock markets appear to be reignited by optimism about the health of the US and global economy and to believe that Trump policies of boosting spending, cutting taxes, and deregulation will result in increased profits for US business. The prospect of an early interest rate hike appears not to be regarded as negative but as a sign the economy is doing well. The rise comes in spite of the fact that Trump's speech had few specifics about his policies. The more positive tone struck by Trump seemed to soothe investor fears even though there is still much uncertainty about how Trump will be able to increase spending on the military and infrastructure, cut taxes and deregulate industry without huge budget cuts. It is difficult to see how he can not cut Medicare, and Social Security, programs he has promised not to cut. Trump said in his speech that he wanted "massive" tax relief, $1 trillion to be spent on infrastructure, and an overhaul of Obamacare. It would seem rather that he wants a replacement for Obamacare although it might be a type of "Obamacare lite". Republicans appear divided on the issue. Trump is no doubt worried about a negative reaction from his base if he does not provide a reasonable alternative to Obamacare that in spite of its problems insures many more Americans than previously.
Since Trump's Nov. 8 election the DJI is up 15.2 percent; the S&P is up about 11 percent and the Nasdaq is up 13.7 percent. The DJI closed Wednesday up more than 300 points or 1.5 percent higher at 21,115. The S&P gained 32 points or 1.4 percent to 2,395. The Nasdaq rose 78 points or 1.4 percent to 5,904. All three are record closing highs.
Peter Cardillo, chief market economist at First Standard Financial wrote:"The markets are trading higher on the softer approach by the President. The dollar and yields are moving higher as next theme of the market, the 'Fed' overrides the Trump effect." The Fed meets on March 14-15. The probability of a rate hike is now 67.5 percent. The dollar gained 0.79 percent while gold prices dropped.
It remains to be seen if stocks can remain for long at this level. On the second of February, Dr. Doom, Nouriel Roubini predicted that the honeymoon of the markets with Trump would soon be over.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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