WASHINGTON, March 1, 2017 – What a difference a day makes. After desultory wandering close to the flat line on low volume in Monday and Tuesday trading, stocks and the major averages that follow them took off like a rocket in Wednesday morning trading action.
As of 11 a.m. ET, the Dow Jones Industrials (DJIA) were up a whopping 241.23 points (+1.16 percent), the broader-based S&P 500 was up nearly as impressively, notching a 25 point gain (1.06 percent), and the tech-heavy NASDAQ was up a slightly less impressive 55.99 points for a 0.96 percent gain. No one knows where things will close at 4 p.m., of course, but trading action is certainly off to a good start this morning.
The main catalyst, it seems, is the shock and awe effect of President Trump’s Tuesday night address to a joint session of Congress. As a new president just taking the reins of government, this speech is traditionally not categorized as a true “State of the Union” address. But it has the same position and importance.
Both Congress and the cynical, anti-Trump media were prepared ahead of time to denigrate the speech as yet another example of the ravings of a mad man. But Trump—who’s displayed a remarkable ability to grow quickly into a deeply political job for which his strictly business career had never really prepared him, ended up hitting not only a home run.
Trump hit the political ball out of the park with an inspirational address that provided clarity and direction for the new administration’s policies that went over astonishingly well with his fractious fellow Republicans who, at times, have been harsher on him than the hopelessly negative Democrats.
Maybe wavering Republicans will take some courage from the positive reception of Trump’s speech, get their collective act in gear, and start delivering what their constituents expect them to deliver. It would finally deliver this hapless party from their long-term lock on the “Stupid Party” label.
The Democrats, of course, made themselves conspicuous in wide photo shots of the House by sitting on their hands for nearly all of Trump’s best applause lines. Particularly ridiculous were the white-clad House Democrats and Senators of the female persuasion who donned their matching, all-white outfits to salute the suffragettes and demonstrate the “purity” of their cause, whatever in Hades that is these days.
The media, as usual, is spending time this morning trashing Melania Trump’s swell black dress. Why not dump on the Democrat frumps who think emulating 1880s fashion is signaling their “progressive” attitude? Of course. That’s not The Narrative. No hugging, no learning for these people.
But no matter. Between clearer policy declarations than he’s ever made before, inspirational messaging, reminders that he’s already kept a goodly number of his promises to voters and—the evening’s most indelible moment—his tribute to the widow of a Navy Seal who recently lost his life in action in Yemen, Trump stayed on-message and on-teleprompter (mostly), adopting a vigorous but respectful tone while asking for some comity and cooperation across the aisle and across his own fractious party to get things done for all Americans, not just for party friends and lobbyists.
Dow Jones futures leaped up after the speech concluded and have never looked back this morning, surprising perhaps because at the same time, remarks from various Fed officials have transformed Tuesday’s 18 percent chance of a march Fed interest rate hike into an 80 percent probability today, a tremendous about-face. We happen to think the Fed is a little ahead of itself.
But markets piled on with yet another positive response to the odds of a March hike by boosting financial stocks big time—a sector that had begun to flag of late, with investors opining that the banks, in particular, had gotten ahead of themselves.
Again, we’ll have to wait and see if this latest burst of irrational exuberance will hold. But right now, the Trump Rally seems to be back on track, a direction that might just continue for a while now that more of the public seems to think that Donald Trump might very well be an actual President of the United States.
This is all “soft data,” of course. But in the wonderful world of stocks, perception is often more important than corporate P&L statements from the previous quarter. That’s because Mr. Market frequently serves as a predictor of future earnings rather than an interpreter of present reality.
What today’s action is telling us, at least thus far, is that the best is yet to come: sell bonds, buy stocks and stock the bar with plenty of champagne. It may be Ash Wednesday today, but Wall Street is still celebrating Fat Tuesday.
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