Dow jumps to record high as hope grows that Trump would lift economy

From The Washington Post:

The Dow Jones industrial average reached a record high on Wednesday amid growing hopes that President-elect Donald Trump would deliver major stimulus to the economy. The index rose 218 points, or 1.2 percent, to close at 18,808, while the broader Standard & Poor’s 500 stock-index also gained.

Among the factors driving the rally were bets on infrastructure stocks such as Caterpillar, whose share price has jumped nearly 20 percent over the past two days. Trump has pledged to allocate as much as $1 trillion to rebuild roads and highways, though much of the money is expected to come from the private sector.

Trump’s economic agenda had been widely criticized on the campaign trail as a danger to the American recovery. But now, as the first pieces of his plan begin to take shape, experts say it could actually have the potential to deliver major stimulus.

In addition, Trump is calling for dramatically lowering the tax rate for individuals and businesses, a move long sought by Republicans. After the election, Senate Majority Leader Mitch McConnell (R- Ky.) cited tax reform among the priorities for next year. On Thursday afternoon, Trump had lunch with House Speaker Paul Ryan (R-Wis.), who issued his own blueprint for tax reform over the summer.

The likelihood of a deal remains highly uncertain, and the price tag for Trump’s cuts is estimated to be as high as $6 trillion over the next decade. But with Republicans in charge of the White House and Congress, the odds appear higher than they were before the election — and that is enough for investors and economists to start recalibrating their expectations.

“The tax cuts and spending increases that are likely to be passed would tend to boost near-term growth, inflation, interest rates and the dollar,” said Ben Herzon, …

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