Ted Bridges Comments to World Herald on US Stocks Post Trump Victory

By November 9, 2016News, Uncategorized

U.S. stocks fluctuated between modest gains and losses Wednesday morning following the surprise victory by Republican nominee and now president-elect Donald Trump.

 

Dow Jones Industrial average stock-futures indexes fluctuated between losses of 190 points and 300 points Wednesday morning before the opening of regular trading, earlier falling 800 points. Stock futures slumped and bonds rallied as markets reacted negatively to the prospect late Tuesday night that Trump could win the election.

 

But once the bell rang – as is often the case with one-time events overblown by nervous investors – things were settled. In early-morning trading, the Standard & Poor’s 500, Dow Jones Industrials and Nasdaq were all up less than 1 percent.

 “While the president is important, capital markets prices and valuations are ultimately driven by corporate profits and interest rates over the long run,” said Ted Bridges, principal at Omaha wealth adviser Bridges Investment Management, which supervises about $1.8 billion of investor assets. “Aggregate economic conditions and company specific fundamentals are far more important factors in capital market returns than political outcomes.”

 

Among Omaha-area companies, some in heavily-regulated industries rose in early-morning trading, perhaps based upon a Trump campaign vow to ease business regulation. Shares of irrigation equipment maker Valmont Industries rose more than 5 percent, or $6.40, to $131.10. Stock of railroad operator Union Pacific climbed $1.44, or 1.6 percent, to $92.06. The shares of TD Ameritrade, the largest online stock broker, jumped nearly 4 percent, or $1.29, to $35.76.

 

Bridges said the Trump victory coupled with a U.S. Senate and House of Representatives controlled by the Republican Party could increase the chances for tax cuts and code simplification.  “That would likely be viewed favorably by the capital markets.,” Bridges said.

 

As for interest rates set by the Federal Reserve that have been at or near zero since 2009, they might inch up if Trump can get enacted his economic platform based on tax cuts and making imported goods more expensive to aid U.S. manufacturing, said Brett Carson, director of research at Omaha money manager Carson Wealth, which has about $7 billion of assets under advisement.

 

“The Federal Reserve has two mandates that guide policy decisions: employment and price stability,” Carson said. “If Trump’s policies prove to be inflationary – which remains to be seen – then we might see the Fed raise rates faster than expected.”

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