President Donald Trump’s State of the Union address helped show why investors are buying stocks, CNBC’s Jim Cramer said.
“He makes it so you want to buy stocks,” Cramer said on CNBC the morning after Trump's speech.
“The president’s making a strong case that there’s a lot of money in the market,” the “Mad Money” host said.
The United States is in its 11th year of a record-setting economic expansion, a fact that Trump highlighted in his State of the Union speech to Congress on Tuesday.
With "The Great American Comeback" as its theme, Trump focused for much of the speech on the strength of the U.S. economy and achievements to support it, like a China trade deal and a new trade pact with Mexico and Canada, Reuters explained.
"I am thrilled to report to you tonight that our economy is the best it has ever been," Trump said.
Cramer explained that what Trump is saying “is $12 trillion has been created in wealth,” so your average American is inspired to jump into the roaring market.
“Previous presidents have not cared about the stock market because they don’t think it’s that big.”
“But I’m listening to him and I’m thinking, I understand why people are buying stocks,” Cramer said.
“There is tremendous wealth being created and what it’s doing is making people, I think, not wanting to sell stocks,” Cramer said.
To be sure, the benchmark S&P 500 posted a record closing high on Wednesday as U.S. stocks rallied for a third straight day on encouraging U.S. economic data and waning fears of the financial fallout from the corona virus in China, Reuters reported.
The Nasdaq also notched a record close but steep losses in Tesla shares limited the index's advance.
The ADP National Employment Report showed private payrolls jumped by 291,000 jobs in January, the most since May 2015, while a separate report showed U.S. services sector activity picked up last month, suggesting the economy could continue to grow moderately this year even as consumer spending slows.
The S&P 500 has more than recovered from last week's steep losses after China boosted liquidity to limit the economic impact of the coronavirus outbreak.
“There are few alternatives to stocks in this low interest rate environment and as long as the economy shows that it can hang in there, people keep coming back to the market as the place to be invested,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
"Right now, they are more afraid about missing out on the market than they are about a sell-off,” Meckler said.
Material from Reuters has been used in this report.
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