The stock market has leveled off in recent weeks, since the so-called "Trump Bump" that began shortly after last year's election. Despite the Dow reaching record highs earlier this year, analysts believe another surge may still be to come depending on action in Congress. "Right now, we're in limbo waiting for progress to commence with regard to Obamacare and with regard to tax reductions," says Ken Moraif, financial analyst and host of Money Matters on KTRH. "And I think they have to go in that order."
Congress got the ball rolling last week with passage of an Obamacare repeal and replacement bill in the House, but that bill still faces an uncertain future in the Senate and a possible rocky path to the president's desk. Nevertheless, Moraif tells KTRH it's important for the healthcare reform bill to pass first in order to free up more tax savings for the big kahuna---tax reform. "The holy grail for the stock market is major tax reduction for businesses and small companies, because that will spur profits and spur employment, and if all of those things happen the stock market will soar," he says. "We have the possibility of a good rise (in the markets) into the end of the year, if progress is made in those areas."
Another big factor when dealing with the stock market is what action the Federal Reserve will take on interest rates. Moraif believes investors have already "baked in" at least one rate hike in the near future. "They are fully expecting a rate hike in June and another one later on in the year," he says. "So what the Fed is doing seems to be less important right now than the bigger picture items."
Those bigger picture items are healthcare reform and tax reform. If both are signed by the president, the markets could see another "Trump Bump" in the months ahead.
Listen to Money Matters with Ken Moraif Saturdays at 4 pm and Sundays at 1 pm on KTRH.