“I don’t think it was the specifics of the executive orders, it’s just that he’s made it very clear that it’s not going to be business as usual in Washington, and that has been generically viewed as overwhelming positive by Wall Street,” Wood said. “It’s clear that this is a broad-based, all-sector-participating rally.”
The so-called “Trump Rally” had begun to lose steam in recent weeks, with the Dow pulling back to close at 19,677.94 on Jan. 19 after closing within a point of the historic 20,000 mark on Jan. 6.
Fed rate hike slows Dow's march toward 20,000
But Trump’s actions since taking office — in addition to a slew of fourth-quarter earnings reports that show about 70 percent of S&P 500 companies beat analysts’ expectations — have helped reignited the post-election rally.
“The market was kind of meandering over the last 10 days, and I think that was the market saying let’s see how much (of Trump’s agenda) is real, and how much is hype,” Wood said. “The market is now saying it has reason to believe that the initiatives set forth by the Trump administration can be translated into economic growth.”
The Dow wasn’t the only index participating in the rally. The S&P 500 Index jumped 0.7 percent to a record 2,295.9,while the Nasdaq closed up 0.99 percent to a record 5,656.34 Wednesday.
Trump rally pushes Dow to another new record
But experts were quick to point out that the stock market isn’t a measure of current economic conditions.
“You buys stocks based on what you anticipate them doing from this point forward,” Wood said. “Investors are saying that if Trump is successful, their companies could benefit.”
Still, the psychological importance of the Dow milestone should not be underrated, he added: “These kind of big milestones are foundational. Once the market is convinced that 20,000 is no longer that line in the sand, there tends to be an enthusiasm for staying above it. I don’t see us backing up.”
In addition to Trump, part of the reason for the optimism reflected the stock market has been the continued strengthening of the economy under his predecessor, Barack Obama. Over the past six years, the U.S. economy has added more than 15 million private sector jobs, and in November the unemployment rate hit 4.6 percent for the first time since August 2007, according to the U.S. Bureau of Labor Statistics.
The Federal Reserve cited improving economic conditions as the reason it raised short-term interest rates on Dec. 14 for only the second time in the past decade. Chair Janet Yellen said the hike was “a reflection of the confidence we have in the progress the economy has made, and our judgment that progress will continue.”