What Really Moves Stock Markets?

The recent stock market reaction to US midterm elections shows that forecasting is a tricky business

John Rekenthaler 14 November, 2018 | 7:21AM

US Congress Midterm Elections

Some observers believe that under Donald Trump businesses have recaptured their "animal spirits" and are acting with renewed confidence, which has stimulated job creation and the stock market. They also say companies are benefiting from January's tax cut.

Such claims are difficult to corroborate. Nobody measures the animal spirits of corporate executives, nor can the effect of a single factor on the economy be readily judged. Even if US job growth had accelerated since January, it would be speculative to credit that change to the tax bill. It is more speculative yet when such an event has not occurred.

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About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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