Many strategists have attributed the 10 percent rally in the S&P 500 <.INX> since Donald Trump’s victory over Hillary Clinton in the Nov. 8 U.S. presidential election to optimism Trump would boost the domestic economy through tax cuts and an infrastructure spending binge.
The gains drove market valuations recently to their highest since 2004, even with little progress in Washington on the fiscal policy front. Meanwhile, other anxiety-provoking events have grabbed headlines, including unsettling relations with North Korea and this weekend’s election in France, which has a bearing on the country’s membership in the European Union and its currency, the euro.
Upbeat earnings from Morgan Stanley <MS.N> and other banks so far this reporting period cushioned those geopolitical worries, helping push the S&P 500 <.SPX> up 0.9 percent this week, its best such performance in two months. Shares of smaller companies did even better, with S&P’s benchmark indexes for small <.SPCY> and mid-cap <.IDX> stocks notching their best weeks of 2017, with gains of between 2 percent and 3 percent.
