Few analysts are so sanguine now, especially after Republicans could not agree last month on how to repeal the Affordable Care Act, after years of promising to do so. If anything, simplifying the tax code or investing in new roads and bridges seems farther out of reach than ever.
But a market surge based on political hopes has been replaced by one more firmly grounded in the financial realm.
Besides steady economic growth or less regulation, investors also have been encouraged by the loose reins of central banks like the Federal Reserve, which have helped keep interest rates not far above their historic lows. Inflation, too, remains tame, with price increases in recent months actually falling short of the Fed’s targets.
At the same time, with yields on safe assets like government bonds so minuscule, there are few appealing alternatives to stocks for investors, according to Torsten Slok, chief international economist at Deutsche Bank.
“No matter how you look at valuations, they are high,” he said. “But as money flows into pension funds every month and needs to be invested, why would I put it in bonds?
“Corporations in America and Europe are still inventing new products and finding ways of doing things more efficiently,” Mr. Slok said. “This is separate from the political theater around the world.”
Moreover, corporate earnings — the fundamental driver of individual stock performance — have been robust.
The strength has spanned sectors ranging from technology to restaurants, as seen in the rise of almost 5 percent in Apple’s shares on Wednesday, or McDonald’s jump to a record high last month. Both are Dow components.
“The first six months of the year have been the best period for earnings growth since 2011,” said Phil Orlando, chief equity strategist at Federated Investors.
Still, many Wall Street investors who are bullish over the longer-term, including Mr. Orlando, concede that the risk of a stock market correction was rising.
“We’ve had this fabulous run since the election,” he said. “But could we see an air pocket in the next few months? Absolutely. Our best guess is that the next 5 percent move is more likely to be down than up.”
Investors have also voiced concerns that trading has been unusually placid — volatility recently sank to a two-decade low, and Wall Street has not had a correction, usually defined as a drop of 10 percent or more, since early 2016. With the current recovery entering its ninth year this summer, a recession seems inevitable.
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But for now, whichever way the stock market goes, most economic metrics like hiring, consumer sentiment and home prices continue to point in the right direction.
Those trends predated Mr. Trump’s taking office, although he took to Twitter several times this week to claim credit for the stock market’s run and soaring earnings. Still, Mr. Sullivan of RPM said that while he did not vote for Mr. Trump, he gave the president credit for setting a new political tone toward corporate America in Washington.
“I’m in the middle of it in Cleveland, and small businesses are looking forward instead of over their shoulder,” said Mr. Sullivan, who is the older brother of Senator Dan Sullivan, an Alaska Republican.
“When Washington practices the Hippocratic oath toward business — first, do no harm — it’s amazing what the American economy can do,” he said. “Under the prior administration, you had a very, very aggressive regulatory environment in which businesses felt under attack.”
Easing regulation is also something Mr. Trump can do with the stroke of a pen or with appointments to agencies like the Securities and Exchange Commission or the Federal Reserve, which require confirmation but not legislation.
Bank stocks, for example, have been among strongest performers on Wall Street since the election, and the trade might be paying off: Regulators could soon weaken the Dodd-Frank Act’s Volcker Rule, which restricted the ability of banks to make financial bets with their own capital.
To be sure, the glow from Wall Street extends only so far. According to the Federal Reserve’s most recent Survey of Consumer Finances, less than 15 percent of American households owned individual stocks and only half had any exposure to the broader market, including through mutual funds or retirement plans.
“Only people with assets like stocks and houses are benefiting, and that’s why this recovery has been weak,” Mr. Slok said.
The contradictory signals between the markets and the political world are hardly unique to the United States. “Most investors in Europe are rolling their eyes at the U.S., but what’s ironic is that it’s similar to the European situation,” Mr. Slok said.
As in Washington, Mr. Slok said, there has been a lot of uncertainty in Brussels and other capitals over major issues, including Britain’s impending exit from the European Union, the economic drag from the continent’s restrictive labor laws and Greece’s fiscal problems.
If the stock market’s prospects are unclear, then the outlook in Washington six months into the Trump administration is downright gloomy.
The year began with Mr. Trump promising to repeal and replace the Affordable Care Act; pass the most significant overhaul to the tax code since 1986; and get Congress to pass legislation to rebuild the nation’s crumbling infrastructure. None of that has been accomplished, as Republicans have struggled to shift from being an opposition party to one that governs.
Beyond those disappointments, fiscal land mines lie ahead that could rattle the economy if Republicans and Democrats cannot cooperate.
By the end of September, Congress must reach a deal to lift the debt ceiling and fund the government for the coming fiscal year. Republicans remain divided over whether conditions such as spending cuts should be attached to raising the statutory borrowing limit. A standoff with Democrats over Mr. Trump’s request to finance a border wall could lead to a partial government shutdown.
The lack of progress has only led to more sniping among Republicans. This week Sarah Huckabee Sanders, the White House press secretary, said, “I think what’s hurting the legislative agenda is Congress’s inability to get things passed.”
Further inaction could prove costly. The debt-limit brinkmanship and government shutdown during the Obama administration rattled markets and slowed economic growth. A Standard & Poor’s analysis after the 2013 shutdown found that the 16-day standoff sucked $24 billion out of the economy.
Mr. Trump has pointed to the growing economy and strong employment figures as evidence that his agenda is thriving. The data is indeed encouraging, but not very different from the figures he used as a candidate to paint a picture of economic despair.
Still, the stock market’s gains were likely to hold up as long as earnings remained buoyant, said Laszlo Birinyi, a longtime stock market analyst.
“While people may have strong feelings in other areas, the stock market is predicated on dollars and cents,” he said.
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