The Dow Jones Industrial Average closed above 20,000 for the first time ever as investors prepare for bullish White House policy
U.S. equities closed at an all-time high Wednesday as a series of bullish policies from the White House have investors hoping that corporate earnings will likely move higher under President Trump. The Dow closed at 20,068.5, up 0.8% on the day, after reaching as high as 20,082.0 during intraday trading.
“People are seeing that the administration is carrying through with some of the things they promised,” said John Stadtler, head of U.S. Financial Services Industry Practice at PwC. “It looks like long-term capital gains are here to stay.”
Despite the positive light the orders cast on the projects, Trump’s presidency does not mean smooth sailing for the oil and gas industry. Trump’s election will likely reinvigorate groups that oppose the development of hydrocarbon projects as well, Brigham McCown, a member of Trump’s Department of Transportation landing team, told Oil & Gas 360®.
“You can’t return to business as usual,” he said. “Companies are going to have to spend time, money and resources on the front end of these projects to get to know the local people, state officials, and to prepare for local opposition.”
Energy projects will be a “very high priority” in terms of new infrastructure projects for the Trump administration, McCown said, but his election will likely reinvigorate groups that oppose the oil and gas industry as well. Effectively communicating with policy makers and other community stakeholders before there is a problem will save companies time, money and a great deal of headache moving forward, even if the new administration is more friendly to new projects.
“Traders have been waiting for more details on infrastructure spending and now they have it in a very clear format,” said Naeem Aslam, chief market analyst at Think Markets. “There is nothing bigger than this. A break of 20,000 for the Dow stimulates fresh capital which has been waiting for this moment to join this party.”
Stocks rallying following the presidential election
U.S. stocks have rallied significantly since the election, with the S&P 500 up 6.6% since November 8, entering Wednesday trading. Investors seem to be excited by the prospects of lower corporate taxes, deregulation of certain sectors and more government spending.
Investors should be prepared for a pullback from these levels though, said Jeremy Klein, chief market strategist at FBN Securities. “If funds continue to shovel capital into equities in advance of an inevitable reprise of an undesirable bout of skittishness, then shares may suffer a selloff greater in magnitude and duration than I anticipate,” he said.
About two stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 879.9 million and a composite volume of 3.8 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.8.
U.S. crude prices fell $0.47 to settle at $52.75 per barrel, after bearish supply data from the Energy Information Administration.
