Dow Jones average breaks through record 20,000

(January 25) Positive corporate earnings helped raise investor optimism and extend a rally that has seen the US Dow Jones Industrial Average(DJ) climb above 20,000 for the first time ever.

The DJ index of blue chip US stocks reached its second fastest 1,000 point rise in history. The DJ had reached 19,000 on November 22 last year shortly after Donald Trump had become president-elect on November 8. European stocks also jumped but the Mexican peso lost value as Trump unveiled steps that included building a wall on the Mexican border. Oil prices dropped as US stockpiles increased.

Quincy Krosby, a market strategist at Prudential Financial Inc. said:“With a swift move towards signing executive orders, coupled with underlying positive economic data, clarity has begun to hit the headlines, and all the U.S. indexes are celebrating.“Clarity is the markets’ oxygen.” No doubt the nature of Trump's decisions helped markets as they included approval of two major pipelines. He also set out possible infrastructure projects and encouragement of auto producers to manufacture in the US.

The DJ had risen 134.64 points from the opening to 20,047. 35 at 11:45 AM. Boeing had the biggest gain of 4.3 percent. The Standard and Poor 500 Index (S&P 500) also jumped 0.6 percent to a record 2,293.68 at the same time. Stocks rose in Europe as well. However, West Texas Intermediate crude dropped below $53 dollars a barrel.

The Toronto Stock Exchange(TSX) hit 15,657.53 points quite close to its September 2014 record of 15,685.13 even though lower gold prices weighed on gold mining company shares. Among the gainers was pipeline stock Trans-Canada Corp. that rose 1.6 percent to an all-time high after Trump signed an executive order putting the Keystone XL pipeline back into play. The market appears to see Trump's policies as pro-growth and pro-business with tax cuts promised.

(January 25) The quite negative Trump policies such as building the wall on the Mexican border and restricting the entrance of people from a number of countries into the US do not seem to counter positive attitudes among investors to Trump policies. Indeed, Trump's anti-environmentalist moves are no doubt thought of as positive for corporate profits. Trump has placed a gag order on several government agencies including the EPA. The EPA has also been asked to freeze all grants, contracts, and other agreements until further notice. Meanwhile Canadian PM Justin Trudeau has applauded Trump's approval of the Keystone XL restoration.

Trump's withdrawal from the Trans-Pacific Partnership (TPP) and his move to renegotiate the North American Free Trade Agreement have not caused markets to turn negative. Perhaps investors believe that any new trade agreements Trump negotiates will not be against business interests. Given the make-up of Trump's administration that seems a plausible viewpoint in spite of all Trump's anti-establishment rhetoric.