Stocks Rise As Trump Becomes America's 45th President

The major indices were each up about 0.2% as the day's ceremonies and inauguration speech were underway. The minor gains were not enough to push the Dow, at 19,785, above the long-awaited 20,000 level.

Trump emphasized in his speech that he will put America first during his presidency. "Every decision on trade, on taxes, on immigration and on foreign affairs will be made to benefit American workers and American families," said Trump, who donned a blue suit and red tie. "Protection will lead to great prosperity and strength."

He bemoaned the loss of jobs to foreigners and said his administration would follow two simple rules: "Buy American and hire American." Trump also touted plans to put Americans to work rebuilding the nation's infrastructure, which he said has fallen into "disrepair and decay."

While Trump touched on several of his priorities he offered few specifics in a speech that lasted about twenty minutes. Investors were watching for his tone, too. "The more 'Presidential' this speech comes across, the better the outcome for markets," wrote Morgan Stanley analysts in a note.

The stock market has enjoyed a broad-based rally since Trump was elected, with the S&P 500 adding 5% and the Dow adding 1,000 points since November. The investor excitement has been fueled by expectations that regulations will be scaled back, taxes will be lowered and fiscal spending will rise.

Yet, there's been some recent profit-taking, as investors take to the sidelines to watch what Trump will actually accomplish as he assumes office. Financials and government bonds just experienced their first outflows in weeks, according to Bank of America Merrill Lynch, while investors added precious metals to their portfolios.

“The markets will be watching how aggressive President Trump will be in pushing new policies," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management. "Executive orders in the very first week of his presidency may indicate what direction his policy changes will take.”

The dollar, which has slid on recent comments from Trump that it was too mighty, was seesawing on Friday. It ticked up 0.03% against a basket of major currencies, according to the AMEX Dollar Index, before sliding 0.12%.

Gold rose 0.18% to $1,203 per ounce and was on track to log its fourth straight week of gains. Investors pushed the yield on the 10-year bond up to 2.5%.

Russian stocks were mostly flat but have soared in the months since Trump's election, in part reflecting optimism that the new President and cabinet members like Secretary of State Rex Tillerson will be friendlier with Vladimir Putin than previous administrations. The ruble-denominated Micex Index has climbed 7% since November.

Bank stocks have been one of the biggest winners of the Trump rally, with the KBW Bank Index up 14% since Election Day, as investors bet that burdensome regulations will be rolled back. Infrastructure stocks like Caterpillar and Martin Marietta Materials have also soared, with Trump promising to ramp up spending on the nation's roads and bridges.

Yet, Trump has taken frequent aim at the private sector in the months since his election, singling out companies and industries for business practices he deems unacceptable.

Automakers, for instance, have been caught in Trump's cross-hairs for manufacturing cars and car parts outside of the U.S. Auto giants like Fiat Chrysler and Ford have rushed to placate the new president by announcing, however incremental, job increases.

Trump has also targeted pharmaceutical companies by saying they're "getting away with murder" by charging sky-high prices for their drugs, a comment which sent biotech and pharma stocks plunging last week. Industry executives had hoped that Trump would adopt a more hands-off approach to drug prices than Hillary Clinton.

While Trump is being sworn in on Friday, confirmation hearings will remain underway in the coming weeks, with Trump's cabinet picks facing hard questions from lawmakers about their experience, policy positions and conflicts of interest.

As for Barack Obama's legacy, he leaves office with a spectacular bull run on the books. The stock market climbed 235% during his time in the White House.

Source: Forbes