Trump tax announcement pushes stocks up

US equities went north on February 9 post an announcement of President Donald J. Trump that he would lower taxes across the board. He said that it is important to lower the empirical tax burden imposed on businesses in the United States. He said that the plan is going swimmingly and he will announce tax positive news in the coming few weeks. The president said this during his meeting with American airline executives. The effect on the stock markets was immediate, with Dow Jones Industrial Average shooting up 115 points. Goldman Sachs was the biggest gainer.

Upside for all

The DJIA went up and settled with 18.06 points, a rise of 0.59 percent to close at the 20,172.40 level. Nike was a big gainer, while Intel depressed overall rise. The Standard & Poor 500 went up 0.58 percent or 13.20 percent to finish at 2,307.87. Financials led the pack of nine sectors. Materials tried to push the index down. The Nasdaq composite went up 0.58 percent or 32.73 points before closing at the 5,713 level. The VIX or CBOE Volatility Index traded at about 10.9. It is considered the best measurement of fear within markets.

According to Matt Weller of Faraday Research, the rise is nearly the resumption of Trump trade. The optimism subsided after Trump did not seem to keep his promise of more infrastructure and increased deregulation. The last announcement restarted the optimism drive all over again. Kate Warne of Edward Jones is of the opinion that the positive feeling is a mix of confidence among investors along with good earnings and lower interest rates.

Caution rules

Many traders are cautious too. Jeremy Klein of FBN Securities warns that Trump may not agree with Congress in many regards. He mentioned that the trade is of low volume and a persistent buyer is leading the push to a rise the market. It is to be mentioned that although equities went up after Trump got elected, they have since then traded sideways. This is due to investors searching for clues concerning the Trump administration’s plans to do a tax cut for the benefit of corporates. There were also the factors of government spending and deregulation. Peter Cardillo of First Standard Financial harbors the opinion that market is presently trading within a narrow range and political worries are to blame for it. He said that if the political worries are removed, the markets will rise by about four percent.

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