The Dow Jones industrial average closed above 22,000 Wednesday, setting a record high in what has become one of its longest bull markets in history.
The extraordinary rise of the stock markets since early 2009 – when the Dow was at a mere 7,063 – has greatly fattened the portfolios of U.S. investors, especially the wealthiest. And it has played a role in boosting the political fortunes of President Donald Trump, who on Wednesday once again took credit for the markets’ performance.
The surprisingly persistent gains this year have come courtesy of robust profits at big companies, low interest rates and a rare alignment of developed economies in good or improving health at the same time. So far, those have been more powerful forces on stocks than world events such as North Korean nuclear missile tests, Venezuela’s economic and political meltdown, or legislative gridlock in Washington.
The markets’ most recent run-up does indeed have something to do with Trump’s win in November, several analysts said. Back then, some on Wall Street cheered the ascent of a businessman into the White House and his promises to cut taxes, invest in infrastructure and increase military spending. The Dow turned sharply up right after the election and has risen 23 percent since then.
Some companies had more to gain from Trump’s pronouncements than others and saw their stocks jump, an effect Wall Street brokers call the “Trump trade.”
Boeing, which generates much of its profits from its Defense, Space and Security division, has seen its shares soar more than 70 percent since Trump’s election. It has accounted for 45 percent of the Dow’s rise this year, far more than any of the other 29 companies in the index.
“We’ve picked up over $4 trillion of net worth in our country, our stocks, our companies,” Trump said at a White House event on immigration Wednesday. “The stock market hit the highest level that it has ever been, and the country is doing very well.”
By the late spring, a series of reports from prominent analysts showed Wall Street was growing skeptical of Trump’s pledges on taxes and infrastructure. But the markets kept marching higher. Stock analysts attribute this to a simple fact: Big corporations such as Apple, McDonald’s and Boeing – which lean heavily on overseas sales – continue to make a lot of money.
“The market has pretty much shrugged off Washington’s dysfunction,” said Chris Gaffney, president of World Markets at…