Trump rings bell for record stock market – but will it last?

Donald Trump stood on Wall Street on Thursday, a cheering crowd of America’s business elite gathered before him, and the bell rang to begin morning stock market trading.

There was an atmosphere of celebration. Not only was the President-elect Named Time Person of the YearBut the stock market, which was already strongly up, has reached new highs since his election.

For Trump, whose public appearances have been relatively few since his election victory last month, the trip is a reminder of the high value he places on market opinion.

But whether history will view their presence as a well-timed harbinger of another economic boom – or a death knell – remains to be seen.

Trump is entering office with a US economy that, in the recent words of US central bank chief Jerome Powell, is the envy of many other countries, with solid growth at 2.8%, unemployment at a historic low of 4.2%. Close to the level and that mysterious ingredient known as “productivity” on a tear.

This has combined to push US stocks to record levels: The Dow Jones Industrial Average is on track to end the year up more than 17%.

The S&P 500, a broad index made up of America’s 500 largest companies, has risen 28% since January, while the Nasdaq, where tech companies have a dominant presence, has surged more than 40%.

Investors are hoping for more, with the Trump administration expected to relax rules and greenlight acquisitions, which could come under tougher scrutiny during President Joe Biden’s administration.

At the stock exchange on Thursday, a host of business leaders gathered, including Goldman Sachs boss David Solomon and Target chief Brian Solomon. The President-elect was greeted with sustained applause and whistles, which was later followed by chants of “USA! USA!” Slogans started being raised.

The presence of a sitting or former president at his visit was relatively rare.

But analysts warn that current highs may be difficult to maintain in the coming year.

Job creation is already slowing and many of Trump’s priorities – including cutting government spending, erecting tough, broad-based trade barriers and mass deportations of immigrants – could hurt growth if enacted. More challenges may arise.

Mark Zandi, chief economist at Moody’s Analytics, said while there is debate over how much the president would actually do, the proposals are creating uncertainty and the potential for significant disruption.

“The totality of the policies, if implemented to the degree that the president has expressed, I think would be problematic for the economy,” he said.

At the stock exchange Thursday, Trump kept his comments focused on other parts of his agenda that were more palatable to markets: cutting taxes for manufacturing businesses in the U.S. from 21% to 15%, cutting regulation and increasing government approvals. His promises to accelerate.

“A nuclear power plant – I’d say a week’s time would be enough. What do you think?” He said laughing.

Similar policies, which Zandi said would be good for corporate bottom lines, if not necessarily for the economy, caused stock prices to rise significantly during Trump’s first term.

He repeatedly cited those gains as a sign of the success of his administration, especially early on.

But the market retreated amid trade wars with allies and China — then declined at the start of the COVID-19 pandemic, before recovering sharply.

Ultimately, the S&P 500 gained more than 67% on his watch – besting records by Presidents Bill Clinton in the 1990s and Barack Obama during his first four years.

Under Biden, the index has soared 59% so far. He declined to predict whether Trump could repeat that performance.

Asked on the stock exchange what investors should be buying in anticipation of the future, Trump, somewhat uncharacteristically, hesitated.

He said, “I don’t want to get into a situation where they do that and we have a decline or something”, then added, “In the long run, this is going to be a country like no other.”