Trump Rings the Bell on a Record Stock Market: Sustainability in Question

Donald Trump stood on Wall Street on Thursday, surrounded by an enthusiastic crowd of business leaders, and rang the bell to start the trading day.

The atmosphere was filled with celebration. Not only had Trump just been named Time's Person of the Year, but the stock market was already on a strong upward trend, reaching new record levels since his election.

For Trump, whose public appearances have been limited since his victory last month, this event highlighted his focus on the market's response to his administration.

However, whether this moment will be remembered as the beginning of a new economic boom or a warning sign of trouble ahead remains uncertain.

As Trump takes office, he does so with a U.S. economy that, according to the head of the Federal Reserve, Jerome Powell, is seen as an example for many other nations. The economy is growing at a solid rate of 2.8%, unemployment is close to a historic low of 4.2%, and there is a marked increase in productivity.

This economic backdrop has contributed to a record-breaking stock market, with the Dow Jones Industrial Average expected to finish the year up over 17%. Meanwhile, the S&P 500, which tracks the performance of the 500 largest U.S. companies, has surged by 28% since the beginning of the year, and the Nasdaq, heavy with technology firms, has increased by more than 40%.

As the stock market continues to climb, investors are optimistic, anticipating that the Trump administration will roll back regulations and approve mergers that might have faced tough scrutiny under the previous administration.

During the bell-ringing ceremony, a notable audience comprised of prominent business figures, including the chief of Goldman Sachs and the leader of Target, came together. Trump was met with loud cheers and chants of "USA! USA!"

His visit was a rare occasion for a sitting or former president to attend such an event.

Yet, analysts caution that maintaining these high market levels in the upcoming year may prove challenging.

Job growth seems to be slowing down, and inflation rates are rising. Additionally, many of Trump's proposed policies, including cuts to government spending, implementing tight trade barriers, and increasing deportation of immigrants, could hinder economic growth if enacted.

Despite ongoing discussions about the reality of these proposals, their potential consequences bring about uncertainty and could lead to significant disruptions in the economy. Mark Zandi, chief economist at Moody's Analytics, commented, "The totality of the policies, if executed as announced by the president, will likely create challenges for the economy."

During the market opening, Trump mainly focused on parts of his agenda that are appealing to investors: he pledged to decrease corporate taxes from 21% to 15% for American manufacturers, reduce regulations, and accelerate government approvals for projects.

His lighthearted remark about how quickly a nuclear power plant could be approved drew laughter from the audience, illustrating his confidence in facilitating corporate growth.

Similar policies helped boost stock prices during his first term, enhancing profitability for many corporations, although they did not necessarily lead to broader economic benefits.

Trump often highlighted these market gains as indicators of his administration's achievements, especially early on. However, the market experienced downturns amid trade disputes with allies and China, and it saw a significant drop at the start of the COVID-19 pandemic before staging a swift recovery.

Ultimately, the S&P 500 grew by over 67% during Trump's presidency, a record bettered only by presidents Bill Clinton in the 1990s and Barack Obama in their initial terms. Under President Biden, the index has increased by 59% as of now. Trump has not made any predictions about replicating these results in his upcoming term.

In response to a question about what investments could yield returns in the future, Trump refrained from making a bold statement, saying, "I don't want to get into a situation where they buy and we have a dip or something." He concluded, "Long term, this is going to be a country like no other."

Trump, StockMarket, Economy