U.S. equity indexes hit record highs on Monday, with the benchmark S&P 500’s market value topping $20trillion as investors bet tax cuts promised by President Donald Trump would boost the economy.
Trump vowed last Thursday to make a major tax announcement over the next few weeks, adding fuel to a rally that had stalled amid worries about the potential impact of his protectionist trade stance and a lack of clarity about other policy reforms.
The S&P 500 has surged about 9 percent since Trump’s Nov. 8 election, boosted by expectations he would lower corporate taxes, ease regulations governing banks and increase infrastructure spending.
Trump has also held high-profile meetings with senior executives from automakers and Silicon Valley technology companies.
“Day after day, corporate executives from a variety of industries are being brought to the White House to consult with the president. Business does seem to be back in the driver’s seat, and I think that’s why people are willing to pay up a little bit more for stocks,” said Jamie Cox, managing partner of Harris Financial Group in Richmond, Virginia.
In every annual budget debate since the 1980s, one side figures out that the way to get what it wants – which is higher spending – is to frame the request in a particular, ingenious way: We have to borrow and spend way more now if we want to borrow and spend way less later.