Trump rally takes Dow over 21000 as investors await tax cuts, deregulation

The Dow Jones industrial average held a 1.7% gain near midday Wednesday as Wall Street reacted positively to President Trump’s speech to Congress on Tuesday night.

US equity indices surged to all-time highs on Wednesday and closed in green. Higher interest rates tend to boost the profitability of banks’ lending activities.

It is fascinating to know Steve Mnuchin, the new U.S. Treasury Secretary, thinks the rally in the market is Wall Street’s way of passing a vote of confidence in Trump’s plan for fiscal stimulus and tax reforms.

Detrick said the strong earnings season is pushing the market forward more than Trump.

But the drive higher has also had an impact on the true average price of stocks, their price-to-earnings ratio.

THE QUOTE: “Trump’s speech. offered only a little additional clarity on the tax reforms and additional spending the White House will be seeking”, said Paul Ashworth, from Capital Economics.

ENERGY: Benchmark U.S. crude rose 13 cents to $54.14 a barrel in electronic trading on the New York Mercantile Exchange.

The Dow advanced about 330 points with Goldman Sachs contributing the most gains. For the month, the index rose 3.7%. The Russell 2000 index slumped 19 points, or 1.4 percent, to 1,388.

St. Louis Fed President James Bullard is slated to give a speech on the US economy and monetary policy at George Washington University at 6:40 p.m. The Nasdaq Composite closed at 5,825.44 for a loss of 36.46 points or 0.62%. The market responded, with JPMorgan Chase shares up 3.3 percent Wednesday and Citigroup shares up 2.9 percent.

Fed chairwoman Janet Yellen is slated to speak on Friday.

“That isn’t to say a normal correction after the big surge since the USA election isn’t possible, it is, but a major bear market correction is still something we’d call a low percentage scenario right now”, he said. The company also issued a weak outlook. Hence, just because indexes retreated 0.1% does not necessarily mean stocks are ready to tumble from previous highs. Raytheon added $1.35, or 0.9 percent, to $154.83.

“This rising optimism towards Europe suggests investors are relatively relaxed regarding the political uncertainty facing Europe over the next 12 months”, HSBC strategists including Amit Shrivastava wrote. “We see growth and inflationary pressures picking up globally”.