Investors remain hopeful that the underpinnings of this latest leg of the eight-year bull market remain intact — specifically, a Congress that can overcome dysfunction and implement pro-growth policies.
“The question is, can they join forces and accomplish that?” said Quincy Krosby, chief market strategist at Prudential Financial “This isn’t just about a win for the White House or a win for the Republican Party, it’s ultimately a win for the country.”
Krosby also sees the Republicans as intent on implementing the Trump agenda even as they move away from him politically.
“It’s very clear that Republicans seem to be distancing themselves from him, the business community is distancing itself from him. You don’t want a leader who appears to be isolated,” she said. “Let’s remember, it isn’t as if the Democrats have found tax reform alien, by no means. Over the years, conservative Democrats have suggested that we need to fix the corporate tax structure.”
Of course, there are multiple other factors at play.
The markets Friday, for instance, recouped losses after word leaked out that Trump was dumping top advisor Steve Bannon — an indication, perhaps, that the administration was not embracing the latter’s brand of economic nationalism.
Some strategists also are worried that the jump in corporate profits this year may not last, with that, too, taking down sentiment.
And there’s also the belief in some quarters that the market isn’t moving on the Trump agenda at all.
“I really don’t know how many people left who think they are going to have anything significant done this year or even by the midterms,” said Jim Paulsen, chief investment strategist at the Leuthold Group.
“The wind under Trump’s magic carpet is basically economic momentum,” he added. “If that stays good, Trump can pretty much do or say anything.”
