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Since President Donald Trump was elected the S&P 500 is up 19.21 percent, and he says it can go much higher if Congress approves "massive tax cuts."
Trump tweeted Wednesday that the stock market has risen more than $5 trillion since his election and the "Fake News Media" has not covered the story of the "unprecedented" rise.
Trump's pro-growth policies and the prospect of corporate and individual tax cuts are certainly getting credit for some of the gains, but, actually, the market is not performing that much differently than it has in other postelection years.
In the same first few months of President Barack Obama's second term, for instance, gained slightly more —19.24 percent — as CNBC's Mike Santoli pointed out Wednesday.
The S&P traded at 2,552 Wednesday afternoon, up 14 percent year to date. The rally, and the "Trump trade," got new life after congressional leaders and administration officials revealed some details of a tax plan last month.
On Wednesday, Trump said he needs Congress to approve those tax cuts to keep the rally going.
"I think that a lot of this momentum can be attributed to the possibility of tax cuts," said Sam Stovall, chief investment strategist at CFRA. "I think that investor optimism is already factoring in a 5 percentage point reduction in the effective tax rate for corporations."
Third-quarter earnings reports are coming out now, and that could add momentum. "If we get a 15 percent rise in earnings, rather than the 10 percent expected for 2018, then 2,665 [S&P] is a good guesstimate as to where the market should be trading by the end of the year," Stovall said. "If we got a 20 percent gain in earnings that would be more like 2,780 on the S&P. ... That's less than a 10 percent gain ... I think a lot of it has been priced in and there's probably more room for disappointment than there is for advance," he said.
According to CFRA, the stock market usually does well in the months after a presidential election, with Democrats faring better than Republicans. From Oct. 31 of a presidential election year through the following July, the S&P 500 averaged a 7.1 percent gain and has been higher 74 percent of the time since World War II.
In the nine months after President Bill Clinton was elected, the S&P rose 7 percent, but it climbed 35 percent in the same period after his second election victory. George H. W. Bush saw stocks rise 24.1 percent, but in the first nine months after his son George W. Bush was elected the first time, stocks fell 15 percent.
In the nine months from Oct. 31, 2016, through July, the S&P was up 16.4 percent, compared with the 19.4 percent gain in the same period when Obama was elected the second time. In Obama's first term, the post-Oct. 31 gain was 1.9 percent after nine months, but it included the big dip after the financial crisis.
Stovall said a rough rule is that every percentage point reduction in the tax rate would add 1 percentage point to earnings.
"Right now, Wall Street is expecting 143.81 in earnings for the end of 2018. If that goes up to 150, then 2,670 is a viable estimate, If we go to 156 which would be a 20 percent gain, then that's the 2,780," he said.
Trump also said the stock market has increased by $5.2 trillion since the election, with the lowest unemployment in 16 years.
The S&P 500 alone has gained $3.4 trillion since the election, while the stocks in the Dow Jones industrial average gained $958 billion, according to Howard Silverblatt, senior index analyst at S&P Capital IQ. He said the broader market has gained more than $4 trillion but that does not include foreign shares trading in the U.S. or companies that are majority-owned. The U.S. accounts for 50.42 percent of all stocks.