U.S. equities and stock exchange traded funds started off on a strong footing Friday but quickly trimmed early morning gains as President Donald Trump made his inaugural speech.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were up 0.1% Friday, slipping after the S&P traded as high as 2,276 earlier in the day.
Early morning gains were pared down on comments made by the new president, the latest indication that Trump remains a major factor in current market moves as traders try to anticipate how the new president will implement policy changes.
“We’re going to see high intraday volatility on off-the-cuff remarks,” Tom Digenan, head of U.S. equities at UBS Global Asset Management, told the Wall Street Journal. “We don’t know how onerous protectionist measures will be, what the tax rate will be or what deregulation we’ll get.”
Trump, though, made a rough outline of how his administration will guide the country, stating that he will follow “two simple rules; buy American and hire American,” along with promising new roads, bridges and highways.
While Trump’s promises of tax cuts, increased fiscal spending and deregulation have helped support the recent market rally, investors are anticipating improved earnings to keep momentum going, but the going may be tough as we extend into the ninth year of the current bull equity market.
“There is reason to be optimistic and for stocks to go up, though maybe not so quickly as sentiment pushed it in that direction,” Paul Christopher, head global market strategist at Wells Fargo Investment Institute, told the WSJ.
Investors will continue to wait on further clarity on Trump’s plans to boost the economy before refueling the risk-on sentiment that has gripped the markets.
“Having listened to Trump’s speech, there is a concern about what his trade policies will be,” Jamie Cox, managing partner of Harris Financial Group, told Reuters. “That’s probably the No.1 area where Trump will have to tone down his rhetoric because we do have to work with other nations.”
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