This could be a “big day” for the stock market, President Donald Trump tweeted on December 4. The next day, the S&P 500 posted its first three-day losing streak since August. On December 19, both the House and Senate voted to pass the much-hyped, allegedly stock-boosting Republican tax plan. That day and the next, stocks slid.
It‘s not that Trump is particularly bad at predicting what‘s going to happen in the markets — it‘s that the markets are notoriously hard to predict. Hedge funds that get paid millions of dollars to make rich people even more money underperform the S&P 500 all the time. Before the 2016 election, there were plenty of predictions that a Trump victory would herald a major stock market correction and global economic recession.
And yet the past year proved once again just how tricky predictions can be. More than a year after the 2016 election, the markets are humming along just fine, even if they‘re not spectacular. The S&P 500 climbed about 19 percent in 2017, and the Dow Jones Industrial Average surpassed multiple 1,000-point markers. The unemployment rate is 4.1 percent, the lowest in 17 years and down from 4.8 percent at the start of the year. (To be sure, much of this can be attributed to the Obama economy.) This hasn‘t been the best year ever for stocks, but it‘s been pretty good. And spirits on Wall Street are high.
I spoke with six market analysts and experts about how they viewed investing in 2017 through the lens of politics and Trump.
The takeaway: investors have learned to traverse the new landscape, both because of Trump and in spite of him.
“The markets are happy. Stock prices are at record highs, credit spreads are narrow, cap rates in the real estate market are thin, you have Bitcoin and Ethereum going skyward,” said Moody‘s Analytics chief economist Mark Zandi. “A big chunk of that is that the entire global economy is growing for the first time in a decade. Markets are strong everywhere, not just here.”