Wall Street, Climbing Sharply, Skips Washington’s ‘Soap Opera’
Our best guess is that the next 5 percent move is more likely to be down than up.”
Investors have also voiced concerns that trading has been unusually placid — volatility recently sank to a two-decade low,
and Wall Street has not had a correction, usually defined as a drop of 10 percent or more, since early 2016.
The initial stock market rally that followed Mr. Trump’s victory in November — the so-called Trump bump — was fueled by optimism among investors
that long-sought action on tax reform and infrastructure spending might finally be at hand.
“The first six months of the year have been the best period for earnings growth
since 2011,” said Phil Orlando, chief equity strategist at Federated Investors.
At the same time, with yields on safe assets like government bonds so minuscule, there are few appealing alternatives
to stocks for investors, according to Torsten Slok, chief international economist at Deutsche Bank.
“When Washington practices the Hippocratic oath toward business — first, do no harm — it’s amazing what the American economy can do,” he said.
The year began with Mr. Trump promising to repeal and replace the Affordable Care Act; pass the most significant overhaul to the tax code since 1986;
and get Congress to pass legislation to rebuild the nation’s crumbling infrastructure.
Despite the disorder in Washington — with a revolving door at the White House
and roadblocks on Capitol Hill — Wall Street and corporate America are booming.
