Market recap for April 21, 2017

Stock market indices and today’s changes
How did the overall markets do?

Dow Jones Industrial Average: 20,547.76 (-30.95, -0.15%)
Reflects changes in 30 well-known stocks (e.g. Apple, General Electric, IBM, Exxon Mobil). Daily movements  of +/- 100 points are considered to be large.

S&P 500: 2,348.70 (-7.14, -0.30%)
Reflects changes in 500 stocks that includes large companies across all sectors. Because it consists of so many diverse companies, it is considered one of the best representations of how the stock market is doing. Daily movements of +/- 10 points are considered to be large

NASDAQ: 5,910.52 (-6.25, -0.11%)
Reflects changes in an index of more than 3,000 stocks that consists mainly of technology companies. Stocks such as Google, Amazon.com, and Microsoft are traded on the NASDAQ. Daily movements of +/- 30 points are considered to be large.


Top financial headlines
What caused the markets to go up or down?

Trump will unveil his tax plan next week…
Following comments yesterday from Treasury Secretary Mnuchin that the Trump administration will unveil a tax reform plan very soon (see 4/20 daily market update),  President Trump on Friday said that he will release a tax plan for individuals and businesses next Wednesday.

Why do we care? Post the November election, markets have rallied mainly on hopes for 3 things: tax reform, deregulation, and infrastructure spending (these are in the correct order in terms of which the markets would like to see most). After the failed attempts last month to repeal Obamacare, investors became pessimistic that the Trump administration would be able to pass their other agenda items such as tax reform, which is one of the reasons why the market has been under some pressure lately.

If progress can be made on passing tax reform in 2017, which investors hope will boost corporate earnings and increase economic growth, this could provide a tailwind to stock prices. However, it is interesting to see markets end the day lower on Friday, perhaps a sign that investors are growing skeptical around Trump’s promised initiatives.

 

The French election takes place on Sunday…
The first round of French elections takes place this Sunday, and uncertainty around the election has grown recently following a surge in the polls from the far-left candidate and concerns over a victory from the far-right candidate (refer to the ‘Broader financial news’ section for more details).

Why do we care? While the centrist and pro-European candidate Macron is still expected to win the contest, the strong poll numbers from Melenchon (far-left candidate) and Le Pen (far-right candidate) have caused some nervousness in the markets since the latter two candidates have discussed pulling France out of the European Union. While this would be similar to the 2016 ‘Brexit’, a ‘Frexit’ is actually more complex since the country shares the euro as its currency, unlike in the UK which utilizes the Pound Sterling. As a result, leaving the EU could cause massive economic chaos and financial uncertainty. While the results on Sunday will have to be watched closely, it is important to note that this is only the first round of the French elections and the second round, which will be based off of Sunday’s outcome, will be held on May 7.