US stocks close higher as Donald Trump takes office

US President Donald Trump and US First Lady Melania Trump (left) depart the Inauguration, Jan 20, 2017.
US President Donald Trump and US First Lady Melania Trump (left) depart the Inauguration, Jan 20, 2017.PHOTO: EPA

NEW YORK (AFP) - Wall Street stocks finished higher on Friday (Jan 20) as Donald Trump was sworn in as the 45th president of the United States and Barack Obama's term ended.

US stocks were in positive territory virtually the entire day, but they retreated from session highs after Trump's inauguration speech, which analysts called populist and protectionist.

"The market wasn't wild about it, perhaps a bit of a negative tone taken rather than a positive tone," said JJ Kinahan,chief market strategist at TD Ameritrade.

The Dow Jones Industrial Average rose 0.5 per cent to close at 19,827.25.

The broad-based S&P 500 gained 0.3 per cent to 2,271.32, as the tech-rich Nasdaq Composite Index also rose 0.3 per cent to end at 5,555.33.

US stocks had enjoyed a torrid rally after Trump's election win on Nov 8 in anticipation that he and the Republican-led Congress would cut taxes and enact other pro-growth measures, but markets lost steam in the past two weeks.

In his address on Friday, Trump promised to build infrastructure, such as bridges and roads, and boost employment, aspects of his agenda the market likes.

But he also adopted a harsh anti-establishment tone throughout the speech, suggesting a tough line on trade that has worried economists.

"Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families," Trump said.

 

"We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs."

The White House shortly after his speech announced he will demand a renegotiation of the North American Free Trade Agreement with Mexico and Canada, and will abandon the pact unless the United States gets "a fair deal."

Analysts said the market is in a wait-and-see mode until Trump follows up on key promises, particularly tax reform, which was not mentioned in the speech, but was again pledged in a statement on the White House website.

"Right now, we can say that the stock market is in a deliberation phase, recognizing that the time has arrived for the legislative reality to live up to the hope of the post-election rally, and knowing full well that governing in this interconnected world is never as easy as campaigning in this interconnected world," said Briefing.com analyst Patrick O'Hare.

The inauguration overshadowed earnings from several large companies, including Procter & Gamble and IBM, which both rose, and General Electric, which fell.

Bristol Myers-Squibb slumped more than 11 percent after announcing it would not seek accelerated regulatory approval for a new lung cancer treatment. But Merck, which is developing a rival drug, jumped 3.7 per cent.