Jan 25, 2017

What else is behind the Trump stock rally

The S&P 500 has surged 5.4% since election day. It's the "Trump Rally."

But a closer look at the individual companies that are driving the stock market surge, and broader economic data, paint a more complicated picture:

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Data: Money.net; Chart: Andrew Witherspoon / Axios

Sure, investors like what Trump's saying: Corporate tax cuts, less regulation, and infrastructure spending will all be good for corporate profits. But Trump is not the only game in the global economy.

Other drivers of the rally include:

  1. A stronger dollar: While this hurts multinationals who do business in foreign countries, a stronger dollar generally means that American companies are more valuable relative to foreign assets.
  2. Signs of life abroad: China has long-term problems, but the government there has been able to prop up growth for the time being. Even Europe is perking up, with Germany announcing this month that 2016 growth was the fastest in five years.
  3. Agriculture companies: They're benefiting from being oversold in 2015 and 2016 out of fears of a global slowdown. But developing economies have kept their heads above water, and everyone's gotta eat.

Go deeper

Updates: George Floyd protests continue for 8th day

Police officers wearing riot gear push back demonstrators outside of the White House on Monday. Photo: Jose Luis Magana/AFP via Getty Images

Protests over the death of George Floyd and other police-related killings of black people continued Tuesday across the U.S. for the eighth consecutive day, prompting a federal response from the National Guard, Immigration and Customs Enforcement and Customs and Border Protection.

The latest: The National Park Service said in a statement Tuesday that while it "is committed to the peaceful expression of First Amendment rights," it "cannot tolerate violence to citizens or officers or damage to our nation’s resources that we are entrusted to protect."

American carnage

Protesters race up a hill to avoid tear gas in Philadelphia, June 1. Photo: Mark Makela/Getty Images

The list of victims has swiftly grown since George Floyd died in police custody just eight days ago.

The big picture: Protests against police brutality have turned into a showcase of police brutality, with tear gas and rubber bullets deployed against crowds. The police have the arsenals at their disposal, but we're also seeing law enforcement officers becoming targets.

McConnell blocks resolution condemning Trump's actions against peaceful protesters

Senate Majority Leader Mitch McConnell (R-Ky.) blocked a resolution introduced by Minority Leader Chuck Schumer (D-N.Y.) on Tuesday that would have condemned the use of tear gas and rubber bullets against peaceful protesters outside the White House on Monday in order to allow President Trump to walk to St. John's Church.

What they're saying: "Justice for black Americans in the face of unjust violence, and peace for our country in the face of looting, riots, and domestic terror. Those are the two issues Americans want addressed," McConnell said on the Senate floor.