By Isaac Cohen*

The performance of the stock market in 2017 was one the proudest achievements of President Donald Trump’s first year. Strong economic fundamentals were delivered by the outgoing Federal Reserve Chairwoman Janet Yellen, of low inflation, almost full employment and moderate growth. Also, the tax reduction favoring corporations and low interest rates, all pushed upward consumer and investors confidence indexes. As described by The Wall Street Journal, 2017 was a year of “unbridled market optimism.”

January started well, with the Dow Jones Industrial Average moving past 26000, an increase of 33.8 percent since the November 2016 election. However, on January 26, the market peaked and entered correction territory with a fall of over 10 percent. Economic fundamentals remained strong and the new Federal Reserve Chairman Jerome Powell stepped in promising continuity. Even so, there was concern that an expansive fiscal policy, of tax cuts, a federal budget with abundant red ink and on top an infrastructure spending program, would stimulate an economy which is very close of full employment.

By the end of February there was a rebound, but by the end of March the market ended the quarter very far from where it started the year, with a quarterly loss of 1.2 percent in the S&P 500 Index, the first fall since 2015.

The other market falls in March were mainly caused by President Trump’s decisions. The first was the mercantilist imposition of tariffs against imports of steel and aluminum and the promise of more against China. Additionally, precisely when technology shares were falling, mainly due to Facebook’s data indiscretions, President Trump decided to attack Amazon’s expansion. This pushed down, 2.3 percent, the FAANG Index (for Facebook, Amazon, Apple, Netflix, Google and other five tech giants).

*International analyst and consultant, former Director ECLAC Washington Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.