Wall Street greets President Trump with a bounce
U.S. equities broke a five-session losing streak and climbed higher on Friday as Donald J. Trump was inaugurated as the 45th President of the U.S. The Dow Jones industrials average gained 0.5 percent, or nearly 95 points. The S&P 500 and Nasdaq rose 0.34 percent and 0.28 percent, respectively. This marked Wall Street’s best Inauguration Day performance since President Ronald Reagan’s second one in 1985 (chart below).
And it capped a historic post-election period for the stock market, with large-cap stocks nearly 11 percent above their preelection low. That ranks as the market’s best Election Day to Inauguration Day move, edging out the rallies enjoyed in the wake of the elections of Presidents William McKinley and Calvin Coolidge.
Wall Street also shrugged off a tendency for weakness on Inauguration Day: According to the folks behind the Traders’ Almanac, stocks fall as new presidents are sworn in two-thirds of the time. The last occurrence, for President Obama in 2008, was marked by a 4 percent decline in the Dow (332 points). Reagan suffered a 2 percent decline on his first inauguration.
Looking back, CFRA Research chief investment strategist Sam Stovall noted that starting with President Dwight D. Eisenhower’s inauguration in 1953, the S&P 500 has risen an average of 1.6 percent during the 100 days of a president’s first term.
Mr. Trump’s inauguration address largely echoed his campaign themes, with economic nationalism and populist sentiment prominently featured. Pledges to increase infrastructure, military spending and border security were all mentioned. And in this digital era, the peaceful transition of power could be watched from the White House website to Wikipedia.
Looking ahead, as the political pomp quiets and traders and investors return to their normal work, the fourth-quarter earnings season will continue to roll on ahead of a Federal Reserve policy meeting at the end of the month.
According to FactSet data, analysts are looking for S&P 500 earnings to grow 3.2 percent from last year -- which would mark the first back-to-back expansion in profitability since the beginning of 2015.
