Politics

Wall Street Confidence Levels Continue To Rise

| by Oren Peleg

For months, Wall Street had cautioned against the economic policies of President-elect Donald Trump. Although Wall Street firms usually prefer Republicans, the combination of tax cuts proposed by Trump and his isolationist rhetoric was thought to be a recession-inducing mix.

In June, Wall Street rating firm Moody’s issued a strong caution of Trump, reported Forbes.

"The U.S. economy will weaken significantly if Mr. Trump’s economic policies are fully implemented as he has proposed," the Moody’s forecasting report said. "The economy will suffer a recession that begins in early 2018 and extends into 2020. During this downturn, real GDP will decline peak to trough by close to 2.4 percent."

On election night, Wall Street showed signs of hesitation as the Dow futures dropped nearly 800 points as it Trump picked up key electoral college votes in Florida and Ohio, noted MarketWatch. 

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But since the election, the stock market has been bullish, reaching historical highs.

According to the Washington Examiner, a recent Wells Fargo/Gallup Investor and Retirement Optimism Index survey shows a similar uptick in Wall Street’s confidence.

As investors head into 2017, the index has risen to 96 points -- a level matching investor confidence in 2007, ahead of the stock market crash.

"While Republican exuberance about Donald Trump's victory may explain some of this, the fourth-quarter jump only added to long-term gains in confidence -- particularly in optimism about unemployment -- that should provide a good foundation to build on in 2017," the survey notes.

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The index high of 178 points was hit in 2000, at the peak of the dot-com bubble. In 2007, the index hit 103, ahead of the Great Recession. When President Barack Obama took office in 2008 -- following an historic stock market crash -- the index stood at minus 64 points.

At the beginning of 2016, the index stood at 40 points, and has only continued to rise. 

Sources: MarketWatch, ForbesWashington Examiner / Photo credit: htmvalerio/Flickr

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