Why The Stock Market Soared In 2017

Dec 29, 2017
Originally published on December 29, 2017 8:15 am
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When the year comes to a close this Sunday night, we'll have the stock market to thank for a good bit of good news in 2017. The Dow Jones has risen by more than 25 percent this year, and the other major indexes saw huge gains as well. NPR's Jim Zarroli explains why.

JIM ZARROLI, BYLINE: It was a year in which the Dow marched past one milestone after another - blowing through 21,000, 22,000 and then...


LIZ CLAMAN: Claman Countdown.

DAVID ASMAN: There we go. It is a record day as the Dow comes even close. We're only like 30, 40 points away from 23,000. We...

ZARROLI: By yesterday, the Dow was at nearly 25,000. The surge in stock prices was great news for anyone with a retirement account and for a lot of other people as well. Josh Peters (ph) of Charlotte, N.C. saw his stock portfolio climb by 27 percent. He's about to quit working and enter a Ph.D. program. So he says, the money will come in handy.

JOHN PETERS: It just gave me a lot more financial freedom to try different things and not be so concerned about my financial well-being.

ZARROLI: No one seemed to talk about the stock market boom as much as President Trump. Before his election, Trump sometimes warned that stock prices were inflated. But this year, he used stock prices to vindicate his economic agenda. Here he was last summer.


PRESIDENT DONALD TRUMP: The stock market hit an all-time record high today - over 22,000. We've picked up, substantially now, more than $4 trillion in net worth in terms of our country, our stocks, our companies.

ZARROLI: In fact, many stock analysts say Trump's agenda of tax cuts and deregulation probably contributed to the boom. But the main reason for the surge has to do with global economic conditions. Stocks were up in much of the world. Paul Christopher is head of global market strategy at Wells Fargo Investment Institute.

PAUL CHRISTOPHER: The U.S., Europe, Japan, China - they're all growing together now for the first time since 2007. And what that's done is to really boost confidence all around the world. And that's really brought more money into equity markets.

ZARROLI: Christopher says U.S. corporate profits were unexpectedly strong this year, and consumers were buying a lot. Credit card debt is growing. But Wharton School finance professor Jeremy Siegel says, regardless of what the stock market has done, there's not a lot of evidence yet that overall economic growth is increasing as much.

JEREMY SIEGEL: I mean, I see some encouraging signs the last two quarters, these last three quarters. But I'm not ready to say that a new trend has really been established.

ZARROLI: And Siegel says he doesn't expect Washington to do much to change that. Now that the tax bill has been signed into law, the benefits of the cuts have already been priced into the market. Siegel says given the sharp partisan divide in Washington, Congress is unlikely to accomplish anything else of real economic significance. And that means 2018 is unlikely to be as good a year for stocks as 2017 has been.

Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.