Typically May and June are down months for the stock market, but so far 2017 has bucked those trends. May finished strong on Wall Street, with the Dow Jones Industrial Average ending the month up by 0.3 percent, making it a 6.5 percent hike in the Dow for the year. And June started off even better, with all three major indexes soaring to at or near-record highs in the first two days of trading, including the Dow up by nearly 200 points.
Ken Moraif, host of KTRH's Money Matters, says this is all still part of the so-called Trump Bump. "Over the past two-plus years, all of the gains (in the market) have come since the election," he says. "And why is that? Because the market is betting on Trump getting taxes down and deregulation down, and infrastructure spend through."
Of all the items on the Trump agenda, tax reform might be the most important to investors. For now, they seem satisfied that Congress is working toward getting a tax reform bill to the President's desk. "(House Speaker) Paul Ryan did say that they will have something before the August recess, so I think he put everybody to bed and said sleep tight, wake up in August," says Moraif.
Another factor which could wake up the markets before August is the Federal Reserve's expected interest rate hike later this month. The Fed has been hinting at this hike since announcing its last rate increase in March. But Moraif doesn't expect it to be a big issue for investors. "This will be the most telegraphed interest rate rise maybe in the history of interest rate rises by the Fed," he says. "So the market, I think, has pretty much understood it's coming."
More than the Federal Reserve, economic trends, or corporate earnings reports, the state of the market is all about the man in the White House. “This market is basically dependent on the optimism or lack thereof that investors have in President Trump getting tax legislation, deregulation and infrastructure spend done,” says Moraif.
Listen to Money Matters with Ken Moraif Saturdays at 4pm and Sundays at 1 pm on Newsradio 740 KTRH