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The stock market set a record, but is it thanks to Trump?

2020-11-27T14:08:11.147Z


What is the real reason for this week's historic rise in the Dow Jones index? By Ronny Rojas This Tuesday, the Dow Jones Stock Exchange marked a milestone: a peak of 30,000 points, a record in its 124-year history. That same day, the outgoing president, Donald Trump, appeared in surprise to the press to take the credit. Was he right to do so? The Dow Jones, the benchmark stock index, surpassed that mark after the Trump Administration agreed to begin the formal transition


By Ronny Rojas

This Tuesday, the Dow Jones Stock Exchange marked a milestone: a peak of 30,000 points, a record in its 124-year history.

That same day, the outgoing president, Donald Trump, appeared in surprise to the press to take the credit.

Was he right to do so?

The Dow Jones, the benchmark stock index, surpassed that mark after the Trump Administration agreed to begin the formal transition to the presidency of Joe Biden, the Democrat who was the winner in the November 3 elections.

[Thousands of families affected by the economic impact of the coronavirus line up to collect food]

"The stock market, the Dow Jones Industrial Average, just hit 30,000, the highest in history," Trump said during the brief appearance in the White House press room.

“We had never exceeded 30,000 and that despite everything that has happened with the pandemic.

[...] It is a sacred number;

no one thought you could see that, "he added.

Trump did not respond to questions from the press. 

What is the real reason for the record rise in the Dow Jones index?

Can Donald Trump really take the credit? 

The first thing to say is that

the president's words are contradictory

.

If today Trump is bragging about the rise in the stock market, a little over a month ago he warned that if Joe Biden were elected president the market would collapse.

The first happened and the second did not, because the reaction on Wall Street has been the opposite. 

[The Dow Jones passes 30,000 points for the first time in history as the transition to Biden progresses]

The

Dow Jones measures

the performance of the 30 largest companies in the United States,

including telecommunications, technology, entertainment, energy and pharmaceutical companies.

The index is used as a benchmark to measure the health of the stock market in the country. 

Getting to this peak has been a long process.

According to an analysis by CNN, the milestone is related to various actions by different governments. 

One of them is the sustained process of economic recovery that began in the Obama Administration, after the 2009 crisis. Trump's arrival at the White House and his promises to lower taxes and eliminate regulations gave the index a boost to reach the 20,000 points, on January 25, 2017. 

The approval of the tax reform, in January 2018, and the corporate tax cut, in December 2017, brought the Dow Jones to 25,000 points, according to the same analysis. 

The stimulus from the Federal Reserve, which brought short-term interest rates to almost zero, as well as the billions of dollars in financial aid approved by Congress, helped the stock index to continue to rise despite the ravages of the pandemic. of COVID-19 in the economy, according to an article by ABC News.

But it was

recent announcements of the new coronavirus vaccines

and the official beginning of Biden's transition of power - including the selection of Janet Yellen, a respected former Federal Reserve chair, as the next Secretary of the Treasury - that lowered levels. uncertainty in the markets and pushed the Dow Jones up to 30,000 points. 

Wall Street and markets show signs of improvement after several days of uncertainty

Nov. 5, 202000: 35

Ryan Detrick, chief market strategist at LPL Financial, a brokerage firm, explained on Monday, November 24, that "the economic surprises of the last six months have created 'animal spirits' to drive the market higher."

Detrick said he anticipates that COVID-19 vaccines will keep the stock market going for a long time. 

“When we have these vaccines here, in the next three or four months, if not sooner, we think things are going to open up.

It seems that a new cycle of economic growth has begun and a bold new market has also been born, ”Detrick said during a speech on the Live the Money Life podcast. 

In August, LPL Financial was already trying to explain why, despite the problems facing the US economy, the stock markets remained high: in addition to the confidence that the markets have shown with the arrival of vaccines, the rise of the investment portfolios called 'Stay at home' (that is, the shares of companies that have benefited during the pandemic such as Zoom, Amazon, Netflix and Peloton) also contributed to this effect. 

So,

although some actions by the Trump Administration may have contributed to the record rise in the stock market

this week, in reality there are many other factors that played a role in making this happen.

The Trump Administration may well take some credit, but it is not the only actor that has moved the chips to get the indices where they currently are.

Source: telemundo

All news articles on 2020-11-27

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