The Trump Rally looks like it is back on again – at least for now.
Even though Wall Street didn’t get the nitty gritty details they hoped for on things like tax reform and trade policy from President Trump last night in his speech to Congress, stock prices rose early Wednesday, with the Dow Jones industrial average jumping more than 300 points and hitting 21,000 for the first time as investors viewed Trump’s more “presidential” and positive tone as a signal that he will have a better chance of getting his economic agenda through Congress.
Wednesday's move above 21,000 came just 24 trading days after the index hit the 20,000 milestone. The last time the Dow closed up more than 300 points was on Nov. 7, the day before the presidential election, when it jumped more than 371 points.
On Tuesday, the Dow’s streak of 12 straight sessions of record highs was snapped with a 25-point decline. In afternoon trading Wednesday the Dow was up 300-plus points, or 1.4%, at 21,112. The Standard & Poor's 500 index climbed 1.4% to 2396.92 and the Nasdaq composite was up 1.3% to 5901.91.
In his address to a joint session of Congress, Trump reiterated his push for “historic tax reform” that will put American businesses on a level playing field with foreign competitors, repeated his calls for a $1 trillion infrastructure spending plan and noted that his administration has “undertaken a historic effort to massively reduce job‑crushing regulations.” The president also said his plans for a repeal and replace Obamacare.
Wall Street grabbed on to Trump’s more conciliatory and upbeat message, such as his call for a “renewal of the American spirit,” and his promise that “dying industries will come roaring back.”
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Trump’s pledge to work across the aisle with Democrats raised hopes on Wall Street that his agenda will now have a better chance of being implemented.
“I think investors were set up for hearing a real negative speech, which is more indicative of Trump’s style,” says Wayne Wicker, chief investment officer at ICMA-RC. “Just having a positive tone suggests to investors that his fiscal policies might have a better opportunity to move forward.”