NEW YORK - Wall Street investors are preparing to celebrate as the Dow Jones Industrial stock index reaches the 20,000 mark, a major milestone. The average fell short Wednesday, but is expected to rally again before year's end, capping off an end-of-year winning streak that has investors encouraged heading into the new year. Among reasons for their optimism: lower unemployment, an improving economy, and president-elect Donald Trump’s promises to deregulate markets and increase infrastructure spending.
Analysts say their optimism on Wall Street is largely driven by the hope that economic policies in a Donald Trump presidency will boost the economy. Jason Benowitz, senior portfolio manager at Roosevelt Investments, told VOA he is optimistic that markets can continue to advance.
“Investors have really zeroed in on three aspects of the Trump policy agenda. These are tax cuts, deregulation, and infrastructure stimulus. And, if enacted, those policies would give a boost to economic growth next year. We would then expect to see corporate earnings accelerate, and, under that scenario, we think the market could continue to advance,” said Benowitz.
Any risk to markets next year, according to Benowitz, may occur if and when Trump’s policies face resistance in Congress.
“They’ll see opposition from the House Freedom Caucus as well as Democrats in the Senate. And he won't be able to pass everything he wants, exactly the way he wants it. And some stocks have been bid up pretty dramatically on the hopes of this policy agenda, and, as it begins to run into roadblocks, we could see some reversal from the gains we've seen this year,” he said.
The Dow Jones Industrials first hit 10,000 points in 1999. The enthusiasm over the new milestone — 20,000 — is reflective of growth across all U.S. markets. In a research report, the U.S. Equity Strategy team at JP Morgan said they expect the S&P 500 index of big companies to achieve 2,300 points in the near term.
Michael Bapis, partner at Bapis Group, said many factors are operating in conjunction together to push prices higher.
"There's a lot of things that are driving it: job numbers are better, unemployment's low, the economy appears to be getting better. Fed chairwoman Janet Yellen said, 'We're getting better, we're improving. We're going to raise rates.' Sentiment out there that's positive," said Bapis.
But as we head into the new year, investors will be watching closely for any uncertainty, on Capitol Hill, and in international markets.