Hours after Donald Trump’s shock victory on Election Day, a particularly glum Paul Krugman used his perch at The New York Times to answer readers’ questions about when stocks might recover from a swoon in the futures market.
The Nobel Prize economist was succinct: “If the question is when markets will recover, a first-pass answer is never.”
The market never looked back, though. On Wednesday, the Dow Jones industrial average closed at an all-time record high of 22.016, up 18.4 percent from the 18,590 close on that November day Krugman penned his lament.
“Here we are, 4,000 points higher,” said economist Stephen Moore, who advised the Trump campaign.
At a news conference Wednesday to announce his support for a bill overhauling America’s immigration system, Trump touted the stock market.
“The stock market hit an all-time record high today, over 22,000,” he said, after the Dow crossed that threshold for the first time in morning trading. “We’ve picked up substantially now, more than $4 trillion in net worth in terms of our country, our stocks, our companies. We have a growth rate, a GDP [Growth Domestic Product], which has been much higher, you know, than anybody anticipated, except maybe us.”
Trump said it is a sign of confidence in the country’s economic future.
“You’re going to see, jobs are pouring back into the country,” he said, citing last week’s announcement that Foxconn would invest $10 million in a new plant in Wisconsin.
Big gains by Boeing Co., McDonald’s Corp., and UnitedHealth Group have fueled the rally by the 30-stock index, rising 380, 171 and 166 points, respectively, since March 1. Caterpillar increased by 99 points, and 3M Co. was up 91 points to round out the top five.
Those gains helped outweigh declines since March 1 by companies such as IBM, Goldman Sachs Group, General Electric Co., and Chevron Corp.
Moore said hitting 22,000 is a nice accomplishment for Trump.
“This is a milestone for the stock market, and it’s an indication of a six-month-long bull market that began the day he was elected,” he said.
Moore attributed the dramatic rise to hope and optimism following the election, but he added that the rally can only continue for so long absent new economic policies. Republican efforts to repeal the Affordable Care Act failed last week, and tax reform remains mired in Congress.
“If Republicans don’t get their act together and reform health care and pass tax reform, then I think there will be some sell-off,” he said. “Investors are confident, but they’re getting nervous.”
(photo credit, homepage and article images: Gage Skidmore, Flickr)