Over the past year the Dow Jones Industrial Average has skyrocketed 5,000 points, or around 25 percent, and it closed at yet another record high on Thursday.
President Trump says the Dow’s performance proves his policies are growing the economy. But the financial markets were surging even before his surprise victory last year. And while many factors may be contributing to the robust markets, the president’s promise to cut corporate taxes and rollback regulation has certainly been welcomed by Wall Street.
“The possibility of taxes going down and the rolling back of a lot of regulations – the combination of those two, when you let companies operate a little more independently and you say you will pay less taxes, it certainly is encouraging,” said Nancy Coutu, co-founder of Money Managers Financial Group which specializes in retirement planning.
Coutu believes the tax cuts recently signed by Trump will ultimately give more spending power to American companies and fuel further growth.
“The majority of employers in this country are small companies,” said Coutu. “Small companies are now going to have the potential to have more spending power, more excess cash which means they may be able to hire another person or two. They may be able to open another office. They may be able to expand their business. It gives corporate America more money to spend – hiring more people, developing new products, buying real estate – so it drives every market across the board.”
Marc Horner, founder of Fairhaven Wealth Management, is also bullish on the prospects for the market in 2018.
“Corporate earnings have been very strong across the board and that’s the single biggest factor in stock market performance,” said Horner, who expects corporate tax cuts and further deregulation to provide “more fuel for corporate earnings in the next year.”
But if the economy is performing well, Horner doesn’t think it has much to do with Trump.
“I think presidents are kind of like quarterbacks in football in that they tend to get too much credit for victories and too much blame when things go badly,” said Horner.
Regardless of who gets the credit, Horner thinks the U.S. economy is looking good for 2018.
“I think it is hard to make an argument that the economy is not doing well. We’ve had back-to-back quarters of 3 percent GDP growth. ... Unemployment is at 4.1 percent and is on the verge of going into the 3 percent zone – that’s remarkably low,” said Horner. “The million dollar question is how long can that continue.”
Coutu and Horner join Eddie Arruza to discuss the stock market’s record-setting performance in 2017 and whether it can continue in 2018.
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