CNBC’s Jim Cramer said it’s a nice psychological milestone for the Dow Jones Industrial Average to crack 20,000 but now the ball is in President Donald Trump’s hands to keep the stock-market party going.
The Dow traded above 20,000 for the first time on Wednesday, resuming a rally that began in the wake of Trump's surprise election victory.
The rally roared back to life after Trump signed numerous executive orders on Tuesday, including clearing the path for the construction of two oil pipelines to boost the energy industry. The S&P 500 and the Nasdaq Composite indexes also hit record intraday highs.
Trump tweeted "Great!#Dow20K."
But Cramer said the market will need to be turbo-charged for the Dow to hit 21,000. Such rocket fuel would be Trump’s campaign vow of tax cuts across the board.
“To go to the next level we have to have the tax breaks,” Cramer said on CNBC.
“ We've kind of gone as far as we can go just on the earnings. That game can't last. What has to happen is there has to be another element. We need rate hikes to have bank numbers up,” and therefore lift the overall market.
“I think that so far the president has not cast cold water on the idea he can get the tax breaks. It comes down to the tax breaks,” Cramer said.
The Dow came within a point of the historic mark on Jan. 6, as investors banked on pro-growth policies and tax cuts many expect from the new administration.
"Trump's been on the job for five days and he's a man of action," Brian Battle, director of trading at Performance Trust Capital Partners in Chicago, told Reuters.
"That should get everyone confident he'll get those three other things done ... which is taxes, trade and regulation."
The first trip to to a five-digit number was a big event for the stock market, when the Dow reached 10,000 in 1999, the height of the tech bubble. But it was a failed start, and the Dow crashed back to the 6,547 in the depths of the financial crisis in March 2009 before returning to 10,000 later that year, CNBC.com reported.
"It took 17 years. That's a long time to double in value," Wharton finance professor Jeremy Siegel told CNBC.com. "We were at the top of the biggest bubble at the end of 1999 that we've ever been in. This is nowhere like the bubble we had before. I think the market is much more reasonably valued than when we hit 10,000," Siegel said.
"I don't think we're going to get to 21,000 as fast as we went from 19,000 to 20,000. It's going to take a quarter," said Siegel.
Trump has vowed to impose tariffs for companies that move out of the U.S. and has moved to change trade deals. Those things concerned investors during the election, and traders are eyeing his moves on trade, CNBC explained. "That is a risk out there. Probably if we knew for sure he wasn't going that way, the market would be even higher than it is," said Siegel.
(Newsmax wire services contributed to this report).
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