The Dow Jones index broke the barrier following the president's renewed pledge
to build a wall along the
US-Mexico border
Wall Street stock markets have rallied since Trump's election victory, with the Dow first coming close to the 20,000 landmark on December 13, and then finishing just 0.37 points shy of the milestone on January 6. It broke the barrier on the morning of January 25, following the president's renewed pledge to build a wall along the US-Mexico border. With the promise of using domestic steel at the heart of the construction effort – and the announcement of two planned pipeline projects – investor confidence in US markets has boomed.
The newly inaugurated president took to Twitter to comment on the milestone, tweeting:
Great! #Dow20K https://t.co/wXFhXBLgag
— President Trump (@POTUS) January 25, 2017
His senior advisor, Kellyanne Conway, tweeted the landmark was a result of:
The Trump Effect. https://t.co/wexrLY0ulp
— Kellyanne Conway (@KellyannePolls) January 25, 2017
Goldman Sachs and JP Morgan are among the big winners of the recent Trump rally, accounting for around 20 percent of the record rise. The Wall Street stalwarts rose by around 34 and 26 percent respectively, fuelled by investor hopes that Trump's fiscal stimulus package will trigger inflation and prompt a rise in interest rates.
While the Dow is perhaps one of the best known US stock market indexes, it has a somewhat limited scope and is thus regarded as an unreliable economic measurement among most market professionals. The index measures the performance of the 30 largest publicly owned companies in the US, from tech giants such as Apple to global banks such as JP Morgan. The Dow assesses performance by tracking the share prices of each company, paying little attention to the overall size of the company in question and failing to adjust for inflation – leading to several peculiarities.
The Dow's rise has been remarkably sudden since Trump's shock victory in November. Given sharp rises on the Dow are historically followed by sharp falls, the index could well stand to lose these impressive gains over the coming months as Trump begins his fiscal spending.
