Wall Street needs President Trump to give it a reason to keep believing.
Trump will deliver a primetime address to a joint session of Congress on Tuesday, the 40th day of his presidency, where he is expected to tout his administration's accomplishments thus far and lay out his agenda moving forward. Bullish investors who have pushed equities markets to record highs on optimism over the Trump presidency will be on the lookout for signals the good times are still rolling.
"Lower corporate taxes, increased fiscal stimulus, significant decrease in regulation, moderation in foreign confrontations," said Dick Bove, an analyst at Rafferty Capital Markets, in on email on what's on his mind ahead of tonight.
Trump's promise of a pro-growth, market-friendly agenda has sent markets soaring. The S&P 500 and Dow Jones Industrial average hit record highs on Monday, and the Nasdaq settled just below its February 21 record. The president himself has taken to bragging about Wall Street's tear as a measure of his success.
"Investors will look for confirmation that the Trump rally has not been based solely on unrealizable expectations," said Sam Stovall, chief investment strategist at CFRA Research.
Wall Street is banking heavily on a promise of profit-boosting tax reform. Benchmark U.S. stock indexes all closed slightly down ahead of Trump's remarks on Tuesday.
Trump and Congressional Republicans have promised reductions to both corporate and individual tax rates as well as a to enact repatriation holiday that would allow U.S. companies to bring back billions of dollars in foreign profits. The president has indicated a package could come from his administration as early as March, though August seems to be a likelier timeline.
While Trump won't need to outline specific numbers on taxes on Tuesday, investors will be looking for signs on his thought process.
"Our sense is that President Trump's speech will skew more towards politics than policy, which suggests a focus on simplification and reduction rates," wrote Compass Point's Isaac Boltansky in a note on Monday. "We expect President Trump to restate a number of headline positive -- albeit highly unlikely -- policy proposals including a 15% corporate tax rate, filings on a postcard, and passage by August."
"Investors are really going to be looking for reassurance," said Alex Cynamon, deputy director of research at Washington, D.C.-based research firm Height Securities. "I don't think anyone seriously expects a lot of details or concrete provisions."
One area where ears will perk up on Wall Street, in Congress and with corporate America is the border adjustment tax. Trump has not yet given a clear signal on where he stands on the controversial measure that taxes imports and exempts exports, and observers will be looking out for clues of his leanings.
Infrastructure will also be an area in focus. Trump campaigned on a trillion-dollar infrastructure spending plan and touted it on election night. His speech is expected to include a major infrastructure initiative, but it's not yet clear how the program will be financed, analysts at Nomura said in a note on Monday.
"We do not know if he will come forth with more detail," the analysts wrote. "We doubt that any infrastructure initiative will substantially increase government spending, especially given the reticence congressional Republicans have shown towards publicly financed infrastructure spending."
And, of course, there's deregulation.
Steve Bannon, the president's chief strategist, in a rare public appearance at the Conservative Political Action Conference in Washington, D.C. last week, spoke of the "deconstruction of the administrative state" as a priority for the administration.
"Every business leader we've had in is saying not just taxes, but it is -- it is also the regulation," he said. "That's all going to be deconstructed, and I think that that's why the regulatory thing is so important."
Items that could interfere with the pro-growth policies fueling Wall Street buoyancy will certainly be on the radar -- including immigration, trade and healthcare, where investors fear lawmakers may get distracted.
"The primary question to me is just the priority of healthcare vs. the pro-growth policies that Trump's been campaigning with and now for a limited time as president trying to move forward," said Mark Heppenstall, chief investment officer at Pennsylvania-based Penn Mutual Asset Management.
Trump continues to push for release of his administration's plan to repeal the Affordable Care Act within two to three weeks. That's an aggressive timeline, but Republicans in Congress might be grateful for White House leadership on an issue where they have struggled to find common ground.
Although a draft of House Republican leaders leaked last week, that plan is believed to be out of date already, as there are still disputes over how large tax credits that will help individuals buy health insurance should be and how much the tax break employers get for providing health insurance to their employees should be rolled back. Some Republican governors are even preparing their own plan for addressing Medicaid as well as the insurance exchanges upon which individuals are currently buying insurance under Obamacare.
"Investors will like to hear how the Trump administration will not allow themselves to get bogged down by the unravelling of the ACA before initiating the economically-stimulative proposals," said Stovall.
Trump marveled on Monday at the complications of reforming healthcare, and it's not the only area his administration has hit snafus.
"All signs point towards more difficulty, [but] the stock market keeps pushing higher," Heppenstall said.
Tuesday, investors will be searching for reasons to keep going -- or pull back.
-- Bill McConnell contributed to this report.