The Trump bump in the stock market ran into trouble when the Republican effort to “repeal and replace Obamacare” foundered in Congress and the Federal Reserve increased interest rates, raising doubts that developments in Washington would treat the markets as kindly for the rest of the year as they appear to have done right after Election Day.
Stocks had recorded a succession of highs in the hope that President Trump’s proposals for significant infrastructure spending, reduced regulation and an overhaul of the tax code would be enacted and be good for business.
But then, the market became choppier.
“The realization is setting in that even with a Republican White House and congressional majority, it doesn’t ensure a smooth enactment of legislation,” said Rebecca H. Patterson, chief investment officer of Bessemer Trust, a firm that advises wealthy families. Referring to the decline in March that accelerated after the health care bill showed signs of stalling, she added: “How much hope was priced in? Well, that much was priced in.”
Maybe more than that, according to Komal Sri-Kumar, president of Sri-Kumar Global Strategies.
“We need all of the Trump stimulus to take place, and we need a tax cut,” he said, to justify stocks’ trading as high as they are. “I don’t think either is going to take place in a hurry.”
