When President Trump was elected last November, the stock market threw a pro-growth party that resulted in a robust year-end rally for the major indices. Stock market participants were enthused by the prospect of reduced regulations, increased infrastructure spending, the repeal and replacement of the Affordable Care Act (aka Obamacare), and, most importantly, tax reform.
That enthusiasm manifested itself in the outperformance of value stocks, but in more recent months, growth stocks have flexed their muscle and have been leading the major indices to new record highs.
The shift in leadership has been plain to see and it plainly suggests that the stock market isn’t as hopeful as it once was that the assumed pro-growth legislation will come to pass.
That has been discouraging in an economic sense because the real-time economic data have served as a reminder that the US economy is still stuck in its low-growth rut.
This post was published at FinancialSense on 07/24/2017.