The 2016 election of Donald Trump as President of the United States was a seismic event that sent shockwaves across various sectors of society. Wall Street, often considered a barometer of economic sentiment, found itself in an unexpected position: having to regroup after the surprise victory of a candidate who, just a few months earlier, had been viewed by many as an outsider with no chance of winning. The election forced a prominent and once-vocal corner of Wall Street—largely liberal-leaning institutional investors, financial analysts, and banking executives—to reconsider their stance and navigate an uncertain political and economic future.
A Divided Wall Street
Before the election, many financial professionals, particularly those on the liberal side of the spectrum, were outspoken in their criticism of Trump. The billionaire businessman-turned-politician was seen by some as a threat to the established economic order, due to his unpredictable rhetoric, outsider status, and populist policies. Wall Street elites, particularly in New York, largely supported Hillary Clinton, whose policy proposals were seen as more business-friendly, predictable, and less divisive.
Trump’s economic platform, in contrast, was filled with promises of protectionism, deregulation, and tax cuts aimed at stimulating economic growth. These proposals were, in many ways, at odds with Wall Street’s preference for stability, free markets, and globalization. The financial industry, with its deep connections to global trade, immigration, and international finance, initially feared that Trump’s populist and protectionist rhetoric could undermine the economic stability that had been cultivated over the previous decades.
In the days leading up to the election, the stock market experienced notable volatility as investors grappled with the uncertainty of a potential Trump presidency. Major financial institutions such as Goldman Sachs, Morgan Stanley, and JPMorgan Chase, while largely supportive of Clinton, found themselves navigating the turbulent political landscape and publicly voicing concerns about Trump’s policies.
The Morning After: Shock and Reconsideration
When the election results were finally clear and Donald Trump had secured the presidency, Wall Street was in a state of disbelief. On the morning after the election, markets experienced a sharp drop in futures, driven by uncertainty over what Trump’s presidency would mean for the global economy. However, within days, the sentiment began to shift. Despite the initial shock, Wall Street quickly adjusted to the reality of a Trump presidency, and many investors began to see the potential for economic growth under his policies, particularly his promises of corporate tax cuts and deregulation.
One of the major turning points came in the form of Trump’s promise to cut the corporate tax rate from 35% to 21%. Wall Street, always attuned to the bottom line, saw the potential for major corporate tax cuts to boost profits and provide a windfall for large corporations. This shift in sentiment was reflected in the stock market’s rapid recovery, as indexes like the Dow Jones Industrial Average began to surge, ultimately reaching new record highs in the months that followed Trump’s election victory.
Financial Regulation and Deregulation
Another significant factor that contributed to Wall Street’s regrouping was Trump’s stance on financial regulation. Throughout his campaign, Trump had repeatedly promised to roll back the Dodd-Frank Act, a sweeping set of regulations introduced after the 2008 financial crisis aimed at curbing risky banking practices. Wall Street, especially the major financial institutions that had been burdened by the costs of compliance with these regulations, saw this as an opportunity for a more business-friendly environment.
Under the Obama administration, many financial firms had spent billions on compliance, and the Dodd-Frank regulations were seen by some as overly restrictive. Trump’s commitment to deregulation signaled to Wall Street that there would be less government intervention in the financial markets, potentially allowing for more freedom to pursue profits. In particular, major banks such as JPMorgan and Goldman Sachs, which had long argued that the regulations hampered their ability to grow, were optimistic about the prospects of a less regulated environment.
Moreover, Trump’s pick of former Goldman Sachs executive Gary Cohn as Director of the National Economic Council was seen as a clear signal to Wall Street that the new administration was aligned with their interests. Cohn’s background in investment banking and finance suggested that the Trump administration would be sympathetic to the needs of the financial sector.
A Shift in Wall Street’s Attitude
As the early months of the Trump presidency unfolded, the once-vocal liberal corner of Wall Street that had been so opposed to his election victory began to regroup and reconsider their position. For many financial professionals, the realization that Trump’s policies could lead to an economic boom was difficult to ignore. The tax cuts and deregulation promised to benefit the business community, which was a key driver of growth for Wall Street. The stock market responded positively, with major indices hitting new highs, fueled by optimism about tax reform and a less burdensome regulatory environment.
At the same time, however, there was a sense of caution within some corners of the financial world. Despite the positive economic outlook, many were still wary of Trump’s unpredictable behavior, erratic tweets, and the potential for geopolitical instability. There was also the matter of his populist rhetoric, which alienated a large segment of the population and created a polarized political environment. Wall Street, with its global reach, is acutely aware of the impact that political instability can have on markets, and there were lingering concerns about Trump’s ability to manage foreign relations and international trade.
The Rise of the Corporate Elite in Trump’s America
Under Trump’s administration, the divide between the political elite and the corporate elite seemed to blur. The president’s focus on tax cuts, deregulation, and pro-business policies appealed to the interests of large corporations, especially those based in Wall Street’s financial district. However, it also became apparent that some in the corporate world began to enjoy a closer, more symbiotic relationship with the administration, thanks to their shared interests in economic growth and deregulation.
Trump’s ties to major financial institutions became even clearer as more and more figures from Wall Street, including former executives of banks and financial firms, joined his administration. The result was a shift in Wall Street’s political landscape, as many of the financial professionals who had previously been vocal critics of Trump were now forced to reassess their views, balancing their political reservations with the economic benefits that came with a Trump presidency.
Conclusion: Wall Street’s Regrouping
The 2016 election victory of Donald Trump represented a profound shift in American politics, one that forced many sectors of society, including Wall Street, to reevaluate their strategies and alignments. The liberal-leaning voices in the financial sector were initially opposed to his election, fearing his populist and protectionist policies. However, as the reality of his presidency began to unfold, many found themselves regrouping in the face of his economic agenda, which promised tax cuts, deregulation, and corporate growth.
Trump’s victory and the subsequent shifts in policy created a new dynamic in which Wall Street’s interests began to align more closely with those of the administration, particularly in terms of tax reform and deregulation. While the uncertainty and unpredictability surrounding the president remained a concern, Wall Street ultimately found itself adjusting to a new reality—one in which political and economic power had shifted, and the financial sector had to adapt accordingly.
