Market Overview

The Romance Between President Trump And Investors Could Be Fading

The Romance Between President Trump And Investors Could Be Fading

In the midst of the Trump rally, the Dow Jones Industrial hit the 20,000 mark on January 25. However, by Tuesday the index briefly dipped below the 19,800 level, which may signal the romance between President Trump and investors has come to an end.

As noted by CNNMoney's Paul La Monica, it's important to put the decline in perspective as the index's drop from above 20,000 to current levels is a mere 1.4 percent - or 270 points. On the other hand, the Volatility Index, also known as the "fear index" rose 12 percent on Monday and is higher by another 7 percent on Tuesday

Meanwhile, CNNMoney's Fear & Greed Index, a representation of market sentiment which includes seven indicators including the commonly used volatility index, shifted from showing signs of Greed a month ago to the current level of neutral.

One reason that could be contributed to the less bullish environment is Trump's rhetoric and actions around immigration and trade proposals, which is offsetting some of the benefits of a tax reform.

La Monica cited Katie Nixon, chief investment officer at Northern Trust Wealth Management who said in a report on Monday that a border tax, limitations in trade and immigration could also create a rise in inflation that could threaten the "Trump rally."

The strong performance of gold could also serve as a sign that investors are questioning if Trump's policies is good for stocks.


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