The Dow Jones exploded higher today, thanks to Trump’s unilateral stimulus and improving Chinese economic data.

The Dow Jones exploded higher today, thanks to Trump’s unilateral stimulus and improving Chinese economic data.

  • The Dow Jones skyrocketed more than 350 points on Monday.
  • Donald Trumps executive orders and Chinese CPI data helped boost the Dow.
  • Nordea Asset Management believes the rally while unsustainable can continue into October.

The Dow Jones Industrial Average (DJIA) exploded higher to start the week, even as the broader stock market struggled for momentum.
Chinese data showed reflation is underway in the worlds second-largest economy, labor market statistics beat forecasts, and investors cheered Trumps fiscal intervention over the weekend.
Dow Jones Soars Alongside the Chinese Economic Recovery
The Dow Jones was comfortably the strongest of the major U.S. stock market indices on late Monday afternoon.
As of 3:27 pm ET, the Dow had surged 360.69 points or 1.31% to 27,794.17.
The Dow Jones rallied more than 350 points to start the trading week. | Source:  Yahoo Finance
That far outpaced the S&P 500, which rose 0.2% to 3,358.09. Despite the broad market gains, the tech-heavy Nasdaq slid 0.52% to 10,953.58.
While it was a relatively quiet Monday on the U.S. economic data front, JOLTS job openings came in at 5.9 million, an increase from the previous month. Hires slid to 6.7 million in June after a strong rebound in May.
Chinese data appeared more pertinent for investors today. Statistics released on Sunday showed that deflation is receding; its most recent CPI reading came in over forecasts at 0.6%.
Chinas inflation data continues to improve at least according to Beijings statistics. | Source: CGTN via Twitter
While U.S. analysts will always take statistics out of Beijing with a pinch of salt, it appears China is doing the heavy lifting in the global economic rebound much as it did after the financial crisis.
Many Dow Jones components have a considerable Chinese presence, which explains why the index outperformed the S&P 500 and Nasdaq today.
Other Factors That Moved the Stock Market Today
Faced with the deadlock in Congress, Donald Trump was forced to step in to reassure a nervy stock market over the weekend.
While Trumps $400 weekly unemployment benefit will not match the $600 Congress allocated via the CARES Act, its better than nothing for jobless workers. His introduction of additional stimulus appeared to have a positive impact on the stock market.
Video: Is Trumps Executive Order Strategy Unworkable?
Other measures Trump addressed through executive orders included a payroll tax deferral for earners under $100,000 and extended student loan interest forgiveness.
While litigation over the legality of Trumps orders remains likely, Dow bulls dont seem fazed. That could change over the long-term, though.
The presidents use of FEMA funds to pay for unemployment benefits could be a worry down the line given an extremely active hurricane season is anticipated in the United States.
Watch: Cramer Still Believes There Is More Stimulus on the Way
Although Trumps actions are controversial, investors dont believe its the final stimulus coming from the federal government.
If anything, the executive orders appear designed to pressure congressional Democrats into cutting a deal with the White House.
Nordea Asset Management Believes Stock Market Rally Can Last Until the Fall
Economist Sebastian Galy at Nordea Asset Management argues the stock market relief rally is nearing its final stage: hope and make-believe.
Even so, he says equity prices could continue heading higher through October as economic data improves.
He explained in a comment shared with CCN.com:
We continue to be in the latter stage of what was once a relief rally, moving from short-term realism to hope and make-believe. This can last into September/October fed by improving data as the summer ebbs, as time does its healing and the US Presidents new executive measure have an impact.
Galy remains particularly wary of growth stocks, which have driven the markets gains since the recovery began in March. He cautions investors to avoid stretching already-extended valuations further.
Video: Soaring Tech Valuations Have Some Analysts Worried
Dow 30 Stocks: China Data Supercharges the Index
Monday was fantastic for the Dow 30, as positive risk sentiment helped pump the majority of the index.
The additional stimulus improved the outlook for consumer spending, a move confirmed by American Express 2.4% jump.
Chinas recovery was good news for Apple bulls, given the companys sizeable presence on the mainland. AAPL shares rose 1.6%.
Most of the other big winners in the index have China exposure too:

  • Boeing rose 5.4%
  • Caterpillar jumped 5.1%
  • Dow Inc. rallied 4.7%.
  • Nike gained 3.8%

Microsoft stock was the weakest link in the Dow Jones, suffering a 2.2% pullback. The only other DJIA component with a noteworthy loss was Disney, whose shares fell 0.8%.
Josiah Wilmoth edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

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