Wall Street has high expectations for Donald Trump's inauguration speech, but it's more likely the president-elect glosses over details, while sending a strong message for change.
Stocks rose on the opening Friday, ahead of Trump's swearing in and speech, at midday. It was a far different market than Thursday, when anxiety about what Trump might accomplish helped lead to a sell-off.
"There's a lot of people that got wound up on the 'buy the election, sell the inauguration trade.' This might be the unwind of that. It doesn't feel like the right trade for today," said Art Hogan of Wunderlich Securities. "At some point the market will wake up to the reality that this is Washington. ... At some point, you have to juxtapose what's been promised, which is a lot ... with what can get done."
The real action from the new president may not come in the highly anticipated speech but in the hours and days after the inauguration. Trump is expected to immediately issue executive orders on matters like trade, immigration and energy, analysts said. But traders will be looking for pointed remarks and details in his first address as president that show that the administration will move quickly to make sure there will be changes to corporate and individual tax law, less regulation and federal infrastructure spending.
"It's become a binary event for the market," said Scott Redler, partner at T3Live.com. "I think the consensus is saying 'sell the inauguration.' Meanwhile, nobody wanted to buy the election until the rally already started." Redler said the line in the sand for traders coming in Friday morning was 2,254 to 2,257 on the , after it closed lower at 2,263 on Thursday.
"Everyone who was saying 'sell the rally,' may have sold yesterday," said Redler. "It seemed a lot of people were hedging into today because they were afraid we'd see selling into the event." He said there is the potential for a big short squeeze, which could send the market much higher if Wall Street hears what it's looking for in Trump's speech.