Investors in U.S. equity markets were keyed in to President Trump's State of the Union address Tuesday night, hoping for clues as to whether financial markets can maintain the momentum they've established so far this year or whether the forebodings that dragged them lower in 2018 will reappear.
In the speech, televised by all the major broadcast and cable networks starting at 9 p.m. Eastern from the floor of the House of Representatives, the president appealed for greater unity among Americans, an aspiration that may seem at odds with the divisive rhetoric he employs when making reference to adversaries, many of whom were in the audience.
Those include House Speaker Nancy Pelosi and Democratic Senators Elizabeth Warren of Massachusetts, Kamala Harris of California and Corey Booker of New Jersey, all of whom will be in the chamber and with all those senators running to replace Trump as president in 2020.
The 90-minute address was among the longest ever, based on data compiled by the American Presidency Project at the University of California at Santa Barbara. The theme of the speech, according to the White House, was "choosing greatness." Trump also touted a strong economy, and emphasized his call for border security.
"Together, we can break decades of political stalemate, we can bridge old divisions, heal old wounds, build new coalitions, forge new solutions, and unlock the extraordinary promise of America's future," Trump said.
"Over the last two years, my administration has moved with urgency and historic speed to confront problems neglected by leaders of both parties over many decades," he said.
In addition to an appeal for unity, the speech touched on infrastructure, national security and prescription drug costs, the latter being of interest to investors in such companies as Pfizer Inc. (PFE - Get Report) and Merck & Co. (MRK - Get Report) . Committees from both the House and the Senate last week held hearings to address rising drug prices.
The president called on legislators to support the fight against HIV/AIDS and childhood cancer, and a nationwide paid family leave program.
The president also addressed energy: "We have unleashed a revolution in American energy. The United States is now the number one producer of oil and natural gas in the world."
The State of the Union address was delayed a week because of the recent 35-day federal government partial shutdown, prompted by the debate over the border wall.
In the democratic response to the state of the union address, Georgia lawyer and former gubernatorial candidate Stacey Abrams blamed the government shutdown squarely on the Trump administration calling it a "stunt engineered by the president of the United States."
Trump said immigrants enrich America in countless ways. He also said he has ordered more than 3,000 troops to prepare for what he called a lawless onslaught against the southern border.
"No issue better illustrates the divide between America's working class and America's political class than illegal immigration," Trump said. "Wealthy politicians and donors push for open borders while living their lives behind walls and gates and guards."
He called on lawmakers to support his plans for border security. The president, as expected, didn't go so far as to declare a national emergency over border security, although that clearly was in his sights earlier in the day, when he tweeted Tuesday morning:
"Tremendous numbers of people are coming up through Mexico in the hopes of flooding our Southern Border. We have sent additional military. We will build a Human Wall if necessary. If we had a real Wall, this would be a non-event!"
Tremendous numbers of people are coming up through Mexico in the hopes of flooding our Southern Border. We have sent additional military. We will build a Human Wall if necessary. If we had a real Wall, this would be a non-event!— Donald J. Trump (@realDonaldTrump) February 5, 2019
During his speech, Trump said of the security wall, "I will get it built."
Among other things, investors have been concerned that Trump will maintain his stance about needing some $5.7 billion to build a wall along the Mexican border, and close the government again in about 10 days if he doesn't get the money. The government will re-enter a partial shutdown if Congress fails to pass legislation to fund several major government agencies by Feb. 15.
Absent a shutdown, Trump may yet declare a national emergency to obtain funds for the wall, something that is likely to provoke legal challenges and even some opposition from members of Trump's own Republican party, including Senate Majority Leader Mitch McConnell of Kentucky.
Either another shutdown or the declaration of an emergency where none exists could bolster investor concerns about the stability and orderliness of the present administration. As chief executive, Trump has presided over record turnover among his senior advisers and sometimes seems to be embrace the sort of chaos that most investors would like to avoid. Trump is also beset by numerous legal probes into the relationship of his campaign to Russia's meddling in the 2016 election as well as into his personal finances, his charitable trust and his inaugural committee.
Many women lawmakers wore white to the State of the Union speech, to show their solidarity with the women's suffrage movement. One hundred years ago, Congress passed the 19th Amendment, guaranteeing women the right to vote -- an anniversary the president acknowledged to broad applause.
The decision of members to wear white was also to highlight the record number of women elected to Congress this year. There are 102 female members of the House and 25 women Senators.
Trump made several references to defense and aerospace during his address, but defense sector investors should be cautious, according to Jim Cramer.
"Well, [President] Trump is uniquely related to the stock market, so he's certainly not going to do anything to hurt it," said Cramer when asked how the State of the Union speech could affect the markets. "People are going to buy defense stocks, that's a mistake. The Democrats in the House ... even though they like defense, I don't think that they're going to be spending."
Defense stocks got a boost in early December on reports that Trump's 2020 budget included a request of $750 billion for defense, a number that was higher than expected. That would be a 4.7% increase from the $716 billion that has been earmarked for 2019.
Prospects of a wider trade war with China and the effects of new tariffs on U.S. manufacturers and consumers have been some of the areas in which Trump himself has created the problems that investors deplore. They will be looking for an update on the direction of negotiations between Washington and Beijing, which will need to produce a deal before March 2 when the Trump administration is set to raise the rate of tariffs on goods made in China.
Chinese Vice Premier Liu He met with officials including U.S. Trade Representative Robert Lighthizer and Trump himself in Washington last week, though it's not clear what if any progress has been made to resolve the trade issues affecting the world's two biggest economies.