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Wall Street grinds higher a year after Trump election rally

Donald Trump warned that the stock market was a "big, fat, ugly bubble" just weeks before he was elected. A year later, Wall Street remains on a milestone-shattering run that the president has been eager to tout and tweet about.

The Standard & Poor's 500 index, the broadest measure of the stock market, has notched 61 record highs and climbed 21.3 percent in the year since Trump was elected.

That exceeds the S&P 500's gain in the first-term election anniversaries of all but two presidents since World War II: George H.W. Bush (21.7 percent) and John F. Kennedy (27 percent), according to CFRA Research.

It also outpaces the market's performance in the same postelection period of several other modern-era White House occupants, including Ronald Reagan (-3.3 percent), Bill Clinton (10.3 percent) and Barack Obama (3.9 percent). But it trails the S&P 500's gain in the first year after the second-term elections of Clinton (31.7 percent) and Obama (23.4 percent).

The billionaire's surprise electoral victory initially set off a steep sell-off in Asian markets. But by the end of the day on Nov. 9, 2016, global markets had steadied and the S&P 500 index closed sharply higher. The market's rally continued for several weeks, driving the major U.S. stock indexes to record highs. This year, stocks have gradually moved higher, clocking new milestones for the indexes along the way.

Eight years into the bull market, investors have been betting that Trump and a GOP-controlled Congress will have a clear pathway to cut taxes, relax regulations and enact other business-friendly policies, despite legislative stumbles that have delayed the administration's efforts.

But Wall Street analysts credit the market's gains mainly to strong corporate profits.

"The most important thing that's happened is we've had very good earnings seasons," said JJ Kinahan, chief market strategist at TD Ameritrade. "Companies are making money. Earnings drive the market and earnings have been good."

Investors have also continued to bet big on economic growth in the U.S. and worldwide as economies in Europe and Asia have bounced back, Kinahan noted.

Since Trump's election, technology companies have led the way with a 39 percent surge. Banks and industrial and basic materials companies have also soared. Only phone company stocks are down from a year ago.

During the first presidential debate between Trump and his Democratic rival Hillary Clinton in September 2016, Trump cautioned that the stock market was in bubble and that even a small increase in interest rates would bring the market "crashing down."

That's not happened, even though the Federal Reserve has been raised interest rates twice this year and is expected to do so again next month.

On average, the S&P 500 has continued "sailing along" for another year after a president's first-term election anniversary, before declining 10 percent or more, said Sam Stovall, chief investment strategist at CFRA Research.

He notes that the shortest time was 36 days following Kennedy's first election anniversary, while the longest stretch was nearly four years after Clinton was elected.

"Should history repeat, and there is no guarantee it will, this bull (market) could continue to surprise investors with its resiliency," Stovall said.

Study: Most student loan fraud claims involve for-profits

WASHINGTON — Students who attended for-profit colleges filed more than 98 percent of the requests for student loan forgiveness alleging fraud by their schools, according to an analysis of Education Department data published Thursday.

The study by The Century Foundation represents the most thorough analysis to date of the nearly 100,000 loan forgiveness claims known as borrower defense received by the agency over the past two decades and paints an alarming picture of the state of for-profit higher education in America. The study was provided to The Associated Press ahead of publication.

The report comes as Education Secretary Betsy DeVos faces criticism for halting two Obama-era regulations that would have added protections for students. Review of tens of thousands of claims has stalled and the AP reported last month that the department now is considering abandoning the practice of full loan cancellation in favor of partial forgiveness. Student advocates point to the Trump administration's ties to the for-profit industry and accuse DeVos of putting industry over students.

The study found "a disproportionate concentration of predatory behavior among for-profit colleges" that raises "serious concerns about the federal government's current approach to providing relief to students who have been defrauded and misled."

The Education Department said it needs to review the report before commenting.

Of the more than 98,800 complaints received by the department as of mid-August, 98.6 percent came from students at for-profit schools, while only 1.4 percent of them were filed by those who attended nonprofit institutions. For-profit schools account for only 10 percent of national enrollment and 18 percent of federal student debt, according to government data.

More than 75,000, or 76 percent, of claims came from students who attended the now-shuttered Corinthian schools, followed by more than 7,300 students from the ITT Technical Institute chain, as well as students from American Career Institute, the Education Management Corporation and others. The Century Foundation received the data through a Freedom of Information Act request.

"The for-profit college industry scams students across the country and taxpayers and that's why the industry, including industry insiders who are now staffing the Department of Education, is now fighting so hard against rules that would clarify the borrower defense process," said Toby Merrill, director of the Project on Predatory Student Lending at Harvard University, a legal services clinic that represents defrauded students. "If for-profit schools don't want to be responsible for borrower defense claims and reimbursing taxpayers, then they could simply not cheat their students."

Steve Gunderson, president of Career Education Colleges and Universities, the industry lobbying group, dismissed the report as an attack on the industry. He suggested that the Obama administration was to blame for the influx of borrower-defense claims from for-profit college students.

"It doesn't surprise me that the Century Foundation issued a report suggesting for-profit colleges are to blame for borrower defense claims. Look no further than the Obama Administration's destruction of ITT Tech and Corinthian," Gunderson told the AP in a statement. "This report confirms what we've long known: There are dozens of groups coordinating their efforts to destroy our sector."

For-profit colleges expanded dramatically over the past two decades, with enrollment rising from around 230,000 in the early 1990s to a record 2 million in 2010. They recruited aggressively, targeting non-traditional students — usually older people who had jobs and could only study part-time. They also focused heavily on women, people of color and veterans. But after graduating, many students struggled to find jobs that were promised to them or to transfer credits to other schools, leading to massive student loan defaults. A 2010 government study found that all of the 15 for-profit colleges evaluated by undercover agents made deceptive statements to prospective students and four of them encouraged fraudulent practices.

The Obama administration cracked down hard on for-profit colleges, pressuring Corinthian and ITT to close and approved at least $655 million in loan cancellations from those chains in recent years. At the same time, the administration also passed revisions to the borrower defense regulation and to another similar rule, known as gainful employment, with the aim of increasing students' protections.

DeVos moved to freeze those revisions before they went into effect. There's now a backlog of 87,000 complaints that haven't been ruled on, according to the TCF report. DeVos said she intends to fight fraud, but believes the Obama revisions were written too broadly and could allow for unsubstantiated claims.