Wall Street Continuing Its Party Mode with Dow Hitting the 21000 Mark

Wall Street Continuing Its Party Mode with Dow Hitting the 21000 Mark

 

The party at Wall Street continues with Dow hurdling past the 21,000 mark nearly a month after it hit 20,000. The markets were looking for some action plan from Trump in its maiden speech to the Congress, but he chose to keep it muted. He did touch the subjects, which the market wanted to hear, of tax reforms, increase in defence spending, and the boost to infrastructure program. What his speech lacked was how he plans to execute them and where will he get the money to do what he intends to do.

In spite of this conciliatory tone in Trump’s speech on Tuesday night, the market is still in jubilant mode and Dow made an all-time high of 21k on Wednesday. Since November 8th when Trump was declared winner, the markets have gained nearly three trillion dollars in value. The markets seem to be optimistic by the remarks made by the Fed officials, which indicate that the rate hike can happen at the March meeting of Fed. Both the New York Fed President William Dudley and San Francisco Fed President John Williams have given such indications in their speeches.

On Wednesday itself, 300 points were added to the blue-chip index to close at 21,115 points. The other two indexes NASDAQ and S&P 500 also gained around 1.3%. The bank stocks gave impetus to this rally with both Morgan Stanley and JPMorgan rising by 3% and the Bank of America surging by 4%. Since November 8th, the banking sector has gone up by 27 percent.

The Managing Director of Wealth Management at Morgan Stanley, Colleen O’Callaghan feels that now investors are getting anxious and they want some concrete plans from the President. His speech at the Congress was short on details. She said, “We need to see these things done, dusted and delivered.”

Luke Bartholomew, the investment manager at Aberdeen Asset Management said, “The market has flipped from being sceptical that a move in March was likely, to now thinking it is more likely than not.” In a day, the market has revised the chances of Fed going for the rate hike in March 14-15 meeting from one-third to two-thirds.

 

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