Dow Futures Jump as America`s hope of Reopening Economy
(Wed, 6 May 2020). Dow Jones Industrial Average (DJIA) futures point to a strong day on Wall Street on Wednesday. President Trump shifts focus to the economy and a fresh round of tax cuts, proving he will do everything to keep the stock market alive. The president’s approval rating has shot back to his personal high as Americans are eager to get back to work. The stock market is setting up for another strong day as President Trump goes all in on the economy. Dow Jones Industrial Average (DJIA) futures point to a 170 point gain on Wednesday.
President Trump has proved he will do everything possible to keep the stock market alive going into the election campaign. He’s now on a rampage to get the U.S. economy firing again, doubling down on his plans to re-open America as soon as possible.
Dow Futures Push Higher
Dow futures contracts were up 170 points (0.7%) on Wednesday, extending yesterday’s gains. Even a dismal earnings report at Disney last night couldn’t dent broader investor sentiment. Dow Jones Industrial Average (DJIA) took a small hit when Disney earnings came in last night, but quickly recovered.
Trump Shifts Focus To The Economy
The White House will begin winding down the coronavirus task force, led by VP Mike Pence, by the end of May. Instead, the Trump administration will now focus on the economy and re-opening states. The move is controversial as it comes while the coronavirus pandemic still ravages America. New models predict that deaths could rise to 134,000 by August if lockdowns are eased now. That’s double the original estimate. But it shows the clear direction of the Trump White House: keep the economy going.
More Tax Cuts Coming?
Investors are also buoyed by Trump’s commitment to include a wave of tax cuts in the next stimulus package. Trump is determined to push his ambitious payroll tax cut plan through Congress and “perhaps” even a capital gains tax cut. The president is also looking at ways to reward companies for investing now by allowing them to deduct costs. In sum, it’s a gift for corporate America, if he can get it passed in Congress.
Trump’s Approval Rating Shows America Is On Board
These might seem like controversial moves from the White House, but Americans are behind Trump. The president’s approval rating is back to his personal best of 49% after dipping slightly in March. That’s significantly higher than his average of 40% through his presidency. Trump’s approval rating jumped back to his personal best in April, 50% approve of his handling of the coronavirus compared to 48% that don’t. (Source: Gallup). Trump’s plans to re-open America and support the economy is playing well with his base and undecided voters. It could give him the edge over Biden going into the election, and that will boost investor sentiment, too.
Dow Jones Could See A Big Summer Rally
As America emerges from lockdowns and Trump throws support behind the economy, we could see another upswing. Fidelity’s Jurrien Timmer says there is optimism in the market. The market is starting to move towards looking at the light at the end of the tunnel. This wouldn’t be an unprecedented move. Election years often see a big swing to the upside over summer. The average gain in the summer months of an election year is 6.7%. Timmer cautions that the markets will need another big catalyst, though. At this point the market has rallied about as much as it’s going to while we’re waiting for the pace of the re-open and the risk of another wave. In the meantime, corporate earnings reports continue to roll in. Some of it are; General Motors, Shopify, PayPal, Lyft, Square, Fitbit, Twilio, and Zynga.
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