Jeremy Siegel, the Wharton finance professor and author of “Stocks for the Long Run,” says stocks have further room to climb if President Donald Trump is able to fulfill his campaign pledge to cut taxes and regulation.
The Dow Jones Industrial Average has risen about 14 percent since the Nov. 8 election to a record intraday high of 20,851.33. That’s within 6 percent of 22,000, the next round number that investors are looking toward.
"I think 22,000 is what is justified if we get … lower corporate taxes and lower regulation," Siegel said in an interview on CNBC. "We should expect a pause and maybe a bit of a consolidation, as we say, before the next run."
In addition to Trump’s speech to both houses of Congress on Tuesday evening, the key events for investors include the March 10 report on the jobs market, and two inflation reports the following week, Siegel said.
Federal Reserve policymakers will meet March 14-15 to discuss monetary policy. Traders forecast that the Federal Open Market Committee will leave its target rate unchanged at 0.75 percent.
The Federal Reserve forecasts that it will raise borrowing costs over the next couple of years as the recovery from the 2008-2009 recession continues. The central bank held rates near zero percent throughout most of the Obama administration in an effort to boost the economy by encouraging borrowing and spending while punishing saving.
Fed policymakers last month forecast that they'll approve three rate increases in 2017 as inflation picks up and joblessness hovers below 5 percent, possibly indicating the economy has reached full employment. They predict the Fed funds rate will rise from 0.5 percent now to 1.4 percent by the end of the year, and to 1.9 percent by the end of 2018.
It "makes sense" to gradually lift interest rates to support the economy, Fed Chair Janet Yellen said on January 18 in prepared remarks.
"Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road — either too much inflation, financial instability, or both," she said.
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