The Dow hit 20,000 today on the optimism of the American economy. Wall Street is banking that Trump’s plan to slash taxes, boost infrastructure and deregulate a variety of sectors will make America grow. A global trade war could disrupt this rosy future, but the milestone is still historic.
Trump’s plans will get a lot of the focus today, but Obama should get a majority of the credit for bolstering an economy that was in shambles when he took over. The Dow was close to 6,440 in Spring 2009 and even before Trump’s win, the Dow was close to this historic mark. Economic recovery has been steady and combined with the Fed’s 0% interest rate many corporations are seeing record profits. Banks are seeing some of the biggest gains from this upward swing as Trump has vowed to rollback Dodd Frank.
The idea of easing pressure on financial institutions and the enthusiasm of Trump’s presidency equaled some of the largest gains in a month ever. Many on Wall Street are not overly excited because they believe some of the trading is fundamental. Goldman Sachs pushed a lot of this rally as many of its current and former staff members took positions in the White House. Besides the bulls wearing their hats today, many are wondering if this top will hurt stock prices in the future since many analysts don’t see milestones like this one as predicative, but rather carry more psychological symbolism. History bears referencing today: After its first close above 10,000 on March 29, 1999, the Dow peaked 10 months later at 11,722.98 on Jan. 14, 2000, faltered through two bear markets in 2000-2002 and 2007-2009, and went more than 11 years before rising above 10,000 in August 2010. So, many analysts today are cautioning against euphoria, but still it is hard to resist gambling on the white-hot Dow.