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The Rally That Defied the Odds

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President-Elect Donald Trump's upset win last Wednesday caught many people in the political and media establishment off-guard. But it wasn't just Trump that defied odds last week.

Economist and Dartmouth professor Eric Zitzewitz was expecting a stock market fallout following a Trump electoral victory. But Wall Street had something else in mind following the billionaire's triumph over Democrat Hillary Clinton. Despite some volatility in the overnight hours the markets did not tank nine percent as Zitzewitz predicted nor did they tank at all. On the contrary they rallied. One might say they rallied big-league. 

That rally began on Wednesday when the Dow Jones Industrial Index rose over 250 points and it continued throughout the week. Zitzewitz said the even-keeled tone of Trump's victory speech may have been the impetus.

"A lot of people seem to be attributing it to the speech Trump gave - his victory speech." Zitzewitz explained, "It was both conciliatory and mentioned really only one policy ... and that was spending a lot of money on infrastructure."

Zitzewitz says Trump's policy prescriptions helped nudge certain sectors. For instance, the President-Elect's call to lower the corporate tax from 30 percent to 15 percent and to repeal Dodd-Frank pushed up bank and financial stocks. Zitzewitz, however, is unsure how long this rally will continue. 

"Trump said a lot of things during the campaign and they were in many cases mutually inconsistent." Zitzewitz said, "And we are going to learn what he really meant. Over the course of the next four years, but especially over the course of the next few months."