The stock market continues its dramatic run by climbing up to a brand new high. It was just a month ago when the Dow made history by reaching 24,000, but that dramatic number is already passé. For the first time in the 121-year history of the index, it has finally reached 25,000. This number is a new high as the market continues its post-Trump climb.
While the number is undeniable, there are still many who are trying to explain why the Dow has climbed so high and how high it might go. There are a number of factors that need to be looked at but the most obvious factor to consider is the Trump presidency. While many point to decisions made by the Obama administration and say that they are just now paying off, it’s undeniable that the Trump presidency has not had the negative impact that many naysayers claimed it would have.
Donald Trump has upset many with his tone, but it’s clear that businesses like what they hear when he talks about the economy. The tax plan spearheaded by Trump and passed by a Republican congress has been greeted with open arms by the Dow. Lower corporate taxes mean higher profits and so businesses and investors are making moves with these future savings in mind. The merits of the tax plan are hotly debated, but it should be clear that it makes investments in American businesses more attractive as companies consider the money they can save by investing in America and avoiding the higher taxes that are demanded in other countries. It’s clear that companies are eying America with new eyes.
Trump and Congress aren’t the only ones who might have a role to play; the federal reserve is another player that has influenced the dramatic rise of the Dow. The Fed has been doing all it can to stimulate the economy and help America climb out of the recession.
Whatever you might think of Trump the fact is that since the start of his presidency the Dow has risen from around 18,000 to 25,000. That’s a rise of over a third in just around a year. To put this in perspective, the Dow took almost a decade and a half to go from ten thousand to fifteen thousand and over three years to go from twenty to twenty-five thousand.
The market isn’t just looking at historic new heights; it is also looking at an extraordinary stretch of almost unbroken growth. The S&P 500 has experienced very few net negative days. No single day has seen a drop of 3% since 2016!
While the Dow’s striking new heights are a cause for excitement for many, there are some who are looking at the numbers and feeling a little nervous. Pessimists feel that the buying frenzy might result in a bubble that might pop and lead to an economic crisis similar to the great recession that the world is just now recovering from. Still, there are signs that gains made seem like they might last. The fundamentals of the economy look better than ever as growth has spread out across a number of trustworthy sectors rather than accumulating in just one area.
There are plenty of reasons to be happy and hopeful. Still, the market is overdue for a rest, and it will come eventually. In the end, only time will tell where the future will lead. For now, the feeding frenzy continues as confident traders continue to push the Dow even higher.