Key Points
The major indexes opened higher and continued to rise on Wednesday in the wake of the State of the Union address.
President Trump announced no major military or economic policy changes that might have spooked markets.
A "ratepayer protection pledge" didn't dampen Wall Street's enthusiasm.
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Markets were jittery going into Tuesday evening's State of the Union Address.
Headlines had been speculating that President Donald Trump might take the opportunity to make a major announcement that would upend the global economy, like announcing a military strike on Iran or a new set of tariffs to replace the ones recently struck down by the U.S. Supreme Court.
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None of that ended up happening. And that has made the market very, very happy, at least for now.
Image source: Getty Images.
No news is good news
All three major stock indexes opened higher in the wake of the president's speech, and continued to climb into Wednesday afternoon.
The S&P 500 (SNPINDEX: ^GSPC), which closed at 6,891 on Tuesday afternoon, opened at 6,915 and quickly climbed from there. By 2 p.m., it had gained 55 points, or 0.8%. Meanwhile, the tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 1.27% over Tuesday's close at 2 p.m., and even the usually more sedate Dow Jones Industrial Average (DJINDICES: ^DJI) was up 0.5% at that time.
The biggest reason for Wall Street's exuberance is its sense of relief. Had President Trump announced a new set of tariffs, or a major overseas military operation, or additional foreign or domestic policy measures to which businesses might have had to adapt, it would have been a different story.
But things have been pretty good for the stock market lately. The major indexes are up between 15% and 20% over the last year, with many individual stocks having risen much higher, and there's no desire from investors to change that status quo. President Trump didn't show any signs of wanting to do so either.
Although the president credited tariffs for "...our country's stunning economic turnaround, the biggest in history, where the Dow Jones broke 50,000, four years ahead of schedule, and the S&P hit 7,000, where it wasn't supposed to do it for many years...," he announced no new action, only saying the tariffs "will remain in place under fully approved and tested alternative legal statutes." Many sectors don't like the tariffs, but the markets have gotten used to them.
The impact on AI
Perhaps the only proposal that might have caused any alarm was the president's announcement that he had negotiated a "ratepayer protection pledge." That means, in his words: "We're telling the major tech companies that they have the obligation to provide for their own power needs. They can build their own power plants as part of their factory, so that no one's prices will go up and in many cases, prices of electricity will go down for the community, and very substantially then."
However, the details on this pledge are scant, and many big tech companies have already contracted with solar farms and other power generation facilities to provide electricity for their AI data centers, so this pledge is unlikely to have much of an impact on their bottom lines.
All in all, the lack of any substantial news from the State of the Union address may be a letdown for political reporters, but it was a win for investors.
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John Bromels has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
