It’s Not Donald Trump That American Corporations Are Excited About

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Corporate America is about to go on a spending spree! They’re so excited about Donald Trump that they can’t hold themselves back!

Except, um, maybe that’s not it after all. The Wall Street Journal reports that the stock market rally of the past month might be due to something more mundane:

The 6.7% rally since then, much of it since Election Day, has largely been attributed to the potential for tax cuts, looser regulation and fiscal spending under the president-elect. But the rise has also coincided with a fundamental improvement: U.S. companies’return to earnings growth.

“It’s earnings growth that drives stocks over the long term,” said Tom Cassidy, chief investment officer at Univest Wealth Management Division…Earnings for companies in the S&P 500 grew 3.1% in the third quarter from a year earlier, according to FactSet, entering positive territory for the first time since the first quarter of 2015, when they grew 0.5%. Analysts polled by FactSet expect the rebound to continue, and are estimating a 3.2% growth rate in the fourth quarter of 2016.

The third quarter, needless to say, was back when everyone was expecting Hillary Clinton to be the next president of the United States. Corporations may indeed be excited by the prospect of lower taxes and the end of pesky regulations, but if you want to know why the stock market is rallying, profitable companies are a more likely explanation than anything Trump is promising.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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