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Dow To Go Higher On Trump’s Infrastructure Plan

By Trade12Stock MarketsMar 13, 2017 10:38AM ET
Dow To Go Higher On Trump’s Infrastructure Plan
By Trade12   |  Mar 13, 2017 10:38AM ET
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After the Dow Jones Industrial Average experienced a slump in the past two weeks, it rallied by 1000 points last week as the US dollar grew stronger making analysts place their bets on the Dow hitting 21,000. The markets then awaited the index to hit 21,000 sooner bringing it closer to reaching 30,000 which would send stocks higher.

21,000 Hit

For the first time this year, the Dow Jones Industrial Average was able to exceed 20,000 and hit 21,000.

Following a strong US jobs data report, the markets are currently positive of two more interest rate hikes from the US federal reserve this year with one expected from the upcoming Federal Reserve meeting this month. The second one is expected around May or June this year.

Despite the market’s optimism on the interest rate hike, 10-year US treasury rates are expected to rise by 3% during the first two-quarters of the year and close 2.8% before 2017 ends.

Analysts are currently holding a defensive position on growth stocks including industrial, consumer discretionary, financials, energy, and technology.

Just a week after the Dow hit new highs, the markets pulled back below 21,000 recently but have already steadied the market’s position for a rally in the coming weeks.

Trump Begins Infrastructure Plan

On Friday, U.S. President Donald Trump announced that he would be starting to create his $1 trillion infrastructure plan with his administration that would encourage states to start building and renovating more highways and prioritize new projects.

In a meeting, President Trump stated that his administration would not give states any budget if they would not be able to prove that they are willing and ready to push through and start with a project.

He also expressed his interests in seeing more projects like high-speed rail roads. Trump also asked Environmental Protection Agency head Scott Pruitt for any project recommendations and asked for details of the Hyperloop, a Tesla Inc (NASDAQ:TSLA)-envisioned project that would allow the transport of passengers through low-pressure tubes in pods.

President Trump’s plan to spend as much as $1 trillion in infrastructure building was announced by Trump last month in front of the joint session of Congress and announced that it would be funded through public and private capital while other reports also said that the White House would be generating around $200 billion in funding through a repatriation tax holiday although the idea is still being placed under consideration.

Although the current administration will take care of the $1 trillion, other reports show that the government will need as much as $4.6 trillion in the next eight years if the administration intends to see a considerable change.

Otherwise, the infrastructure plan has been received positively by the markets and is remarked as a promising national rebuilding plan by analysts.

Dow To Go Higher On Trump’s Infrastructure Plan
Dow To Go Higher On Trump’s Infrastructure Plan

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