Presidents normally decline to take credit for gains in the stock market. The Dow Jones and the Standard & Poor’s 500 are simple reflections of market sentiment and short-term profits, after all. And what goes up has a way of inevitably going sideways or crashing down.
That has not stopped Donald Trump and his administration from celebrating the Dow hitting 22,000 for the first time this week. A little less than a year ago, Trump described the soaring stock market as a “big, fat, ugly bubble.” Now, he argues it is a reflection of corporate executives’ belief that things are looking up, thanks in no small part to him.
Business is looking better than ever with business enthusiasm at record levels. Stock Market at an all-time high. That doesn't just happen!— Donald J. Trump (@realDonaldTrump) August 3, 2017
Might he be right? Trump has promised a big infrastructure bill and tax cuts. His effort to trim away regulations looks likely to boost corporate profits, particularly in the financial and energy sectors. Moreover, he has stocked his administration with market-sensitive Goldman Sachs alumni, including Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn. And he has not yet carried through with his promises to start a trade war, a possibility that businesses have lobbied strongly against.
Plus, after his victory, there was a surge in stocks, Treasury yields, and the value of the dollar—the so-called “Trump bump,” driven by Wall Street’s belief that Washington’s gridlock would end and tax cuts and spending bills would arrive. “Markets seized on Trump’s growth-focused message,” argued Charles Himmelberg, a Goldman strategist, shortly after the election. He said it was “visible in the speed with which the market’s narrative on the economic outlook under Trump has shifted from ‘uncertainty’ to ‘growth.’”