A few days back, U.S. President Donald Trump took credit for the robust performance of the stock market. However, on Tuesday, CEO of one of the world’s largest computer chipmakers Intel Corporation (NASDAQ:INTC) took some credit off of Trump.
Tech rally unrelated to Trump: Brian Krzanich
After the S&P 500 closed at a fresh record high on Friday, Trump was quick to take credit for it.
“The reason our stock market is so successful is because of me. I’ve always been great with money, I’ve always been great with jobs, that’s what I do,” Trump told reporters on Air Force One over the weekend.
Intel CEO Brian Krzanich, however, does not fully agree with Trump, and believes the Trump administration has little to do with the upbeat performance of technology stocks. Speaking to CNBC, Krzanich said, “I don’t believe, especially when you look at the technology stocks, people look at government or politics as to how they value us.”
Brian Krzanich noted that investors focus more on the profit and revenue growth while making an investment decision. And, going forward, the technology stocks would continue to be driven more by products, growth and innovation “than anything in politics.”
Brian Krzanich resigned from Trump’s American Manufacturing Council in August as he felt that “politics and political agendas have sidelined the important mission of rebuilding America’s manufacturing base.”
Partial credit for stock market rally
After the 2016 election, there were positive sentiments in the market that tax cuts, infrastructure spending and regulatory reforms would assist in boosting corporate profits. This helped the S&P 500 to gain about 6% in the first month after the election, but beyond that, Trump has little to do with the rally.
In addition, many believe that the overall rally in the stock market can be attributed to the strong performance of corporate earnings.
“This year U.S. corporate earnings have met or exceeded expectations, so I think it’s the global macro recovery that’s been pushing up U.S. or worldwide equity markets,” Thomas Kwan, chief investment officer of Hong Kong-based Harvest Global Investments Ltd. told Bloomberg.
Talking of the White House, Kwan noted that there might a small tax cut, but other policies may not have an “obvious” impact on the markets. In addition, there are concerns if Republicans will be able to push through their legislative agenda.
Another factor likely contributing to the rally is the return of global growth. Global growth is seen as the biggest contributor to the global rally seen this year.
“Most foreign equity markets have benefited from an upswing in global growth,” says Goldman Sachs, according to CNBC.
All major markets are up double digits including Hong Kong 32%, Shanghai 10%, India 25%, Japan 20% and Germany 16.5%. The only exception is the U.K., which is up only 5% on Brexit concerns.
Since the 2016 election, the S&P 500 is up 21%, while the Dow has moved up 28.5% in the same period, and the Nasdaq Composite has gained over 30%. Reuters, citing data from the S&P Dow Jones Indices data, notes that the S&P 500 has closed at a record high of 52 days in 2017, the fifth best so far. The previous best has been 77 days in 1995, 62 in 1984, 59 in 1928 and 53 in 2015, notes Reuters.