Page 24 - ARUBA TODAY

Monday 6 March 2017 BUSINESS
24

Wall Street Reader:

The bump isn’t just Trump: What’s driving the stock rally

STAN CHOE Improvement was under- with more purchases. That
AP Business Writer way before Trump entered buying has helped to bid
NEW YORK (AP) — The the White House, but his up stocks even more.
stock market is hitting new election has spurred things CORPORATE PROFITS ARE
heights, and yes, excite- along. Optimism among GETTING BETTER: Big busi-
ment about President small businesses, for ex- nesses are finally earning
Trump’s policies is part of ample, spiked higher after bigger profits again.Earn-
the reason for it. But it’s not the election and is now at ings per share for compa-
the only one, analysts say. its highest level since 2004, nies in the S&P 500 were
Even if Donald Trump had according to surveys from nearly 6 percent higher
lost the election, many the National Federation last quarter than a year
professional investors and of Independent Business. earlier, with nearly all of
analysts say they still would Confidence also jumped the companies reporting,
have expected stocks for regular households fol- according to S&P Global
to rise, just perhaps not lowing the election, and Market Intelligence. It’s
to the same degree. The consumer confidence is at a sharp turnaround from
Standard & Poor’s index its highest level since the a year ago, when low oil
has leapt 11.3 percent summer of 2001. prices and other factors
since Election Day, pack- If that translates into more were pulling down profits
ing more gains into four purchases at stores and for S&P 500 companies.
months than it’s had in four Trader Gregory Rowe works on the floor of the New York Stock elsewhere, it should drive Profit growth was particu-
of the last six full years. It Exchange. The stock market is hitting new heights, and yes, ex- even more economic larly strong for technology
dipped a bit Thursday, but citement about President Trump’s policies is part of the reason growth. and financial companies.
it’s still close to its record set for it. But it’s not the only one, analysts say. Other economies around Microsoft’s earnings rose
a day earlier. (AP Photo/Richard Drew) the world are also improv- on stronger sales of busi-
Here’s a look at some of bills for companies should given recent gains in inter- ing, raising expectations ness software, for example,
the factors behind the lead to an immediate est rates, which will make for profits of big U.S. com- and investment banks re-
strong run for stocks: rise in earnings, and stock lending money more profit- panies, which do a lot of ported a strong quarter for
THE TRUMP BUMP: The first prices tend to track profits able. their business overseas. their trading operations.But
reaction for markets to over the long term. Easier THE ECONOMY IS GETTING HIGHER CONFIDENCE ALL just as each of these pillars
Trump’s win of the White regulations should also BETTER: Growth has been AROUND: Confidence has has helped to lift stocks in
House was confusion. help businesses, the think- frustratingly slow since the spread even to regular in- recent months, a weaken-
Many investors had been ing goes, particularly big end of the Great Reces- vestors. ing of any of them could
expecting a victory for Hill- banks and other financials sion, but the job market is After years of hiding out in remove some support. If
ary Clinton, and markets that have been under re- picking up steam. The un- bonds and other safer in- tax cuts come later than
around the world tumbled strictions imposed following employment rate in Janu- vestments, retail investors expected, or if they end
on election night as the the financial crisis.Finan- ary was 4.8 percent, and began creeping back into up being only minor ones,
result became apparent. cial stocks have been the economists see the econo- stock mutual funds and it could mean a drop for
But they reversed course best-performing sector by my as close to full employ- exchange-traded funds stocks.
within hours. The reason: far of the 11 that make up ment. A report on Thursday following the election. In- Critics also worry that that
Investors are expecting the the S&P 500 since the elec- showed that the fewest vestors plugged $20.7 bil- stock prices have run up
Trump White House to push tion. Besides the hope for number of workers applied lion into U.S. stock funds at a time when they were
through tax cuts for busi- looser regulations, analysts for unemployment benefits in November, the biggest already looking overpriced
nesses and to loosen regu- are also excited about the last week since Richard Nix- month in nearly two years. relative to their earnings.
lations on them.Lower tax prospect for bigger profits on was in the White House. They’ve followed that up One popular way to mea-
sure whether the stock
UK asset managers Standard Life, Aberdeen discuss merger market is expensive or not
is to compare the S&P
500’s level against its earn-
LONDON (AP) — British as- lion) company, reflecting be subject to shareholder board of the combined ings over the prior 10 years,
set management firms Ab- the combined market cap- approval. Aberdeen share- group, and Aberdeen’s adjusted for inflation. By
erdeen and Standard Life italization of the two firms, holders would own 33.3 chairman Simon Trough- that measure, which was
are in talks about a possible overseeing assets worth percent and Standard Life ton would become deputy popularized by Nobel-
merger that could create 660 billion pounds ($811 bil- shareholders 66.7 percent chairman. winning economist Robert
one of the country’s largest lion). of the combined group. Standard Life will announce Shiller, the S&P 500 is close
fund managers. Standard Life said in a state- Standard Life chairman its intentions on making an to its most expensive level
The move would create an ment Saturday that the Gerry Grimstone would offer, or not, by the eve- since the dot-com bubble
11 billion-pound ($13.5 bil- completion of a merger will become chairman of the ning of April 1. q was deflating in 2002.q