Investors enjoyed President Trump during the first year in office, and the markets flourished. This year seemed to start off strong. The Standard and Poor’s nearly gained 6 percent during the first month of 2018, and U.S. equities indexes hit record highs.
“The stock market never goes down anymore,” Bloomberg’s Elena Popina wrote in January.
But then, in February, it did. The Dow saw its two biggest one-day point losses ever in the span of a week, and since then things have been choppy. Stocks tumbled the first day of the second quarter. It was the worst start to April since 1929.
Trump routinely bragged about the stock market when it reached record highs. However, his tendency to tout the market’s success tethered him to its metrics, and that means he now owns its slumps.
The last time Trump tweeted about the stock market was March 26, when the Dow posted its third-best one-day point gain ever. Of the five biggest one-day gains for the Dow in its history, Trump has overseen two of them.
It’s worth noting, however, that of the Dow’s five biggest losses, Trump has been president during three: two of more than 1,000 points, and another of 725. He hasn’t mentioned the losses — even though he is at least in part to blame for the market’s latest troubles.
His threats against Amazon have dragged down its stock and contributed to the tech sector’s pullback, and his slow march toward a potential trade war has investors on edge. Amazon fell by more than 5 percent as the president fired off tweets accusing the company of tax and Post Office-related malfeasance.
Investors are spooked: Amazon fell by about 5 percent April 2. Trump’s actions on trade have made Wall Street nervous as well. On April 2, China imposed tariffs on an estimated $3 billion worth of U.S. goods in retaliation to Trump’s steel and aluminum tariffs.
Trump lashed out against North American Free Trade Agreement, which he has repeatedly threatened to pull out of or scrap. The trade actions seem to be rolling back any benefits the stock market received from Congress’ tax cuts.
“When I think of U.S. policy, what tax cuts have given, protectionism is taking away,” Eric Lascelles, chief economist at RBC Global Asset Management, told Politico. “The question is just how much is taken away on the protectionist side. Taking away NAFTA would be a 0.4 percent hit to GDP. And $100 billion a year forever is hardly something worth laughing at. These are very real consequences.”
It’s not as if Trump has ever been a level-headed figure. He has threatened Amazon, China and NAFTA since before his inauguration, and his Twitter has been a sustained fixture of his presidency.
So, what changed? In my opinion, Trump has not changed, but circumstances on Wall Street have. Trump isn’t the underlying cause of market turmoil, but contributed to an aggregated amount of pressure, which is just now breaking through.
Stock valuations are higher, interest rates are rising, the labor market is tightening and it appears inflation could finally be on the horizon. At the start of the year, the stock market got particularly hot with a concentrated run in popular tech names and retail investors with a serious case of market-oriented fear of missing out.
So, when the market got skittish in February, effects on the market were amplified. Consider this: on June 28, 2017, Trump tweeted about Amazon not paying taxes. Amazon’s stock ended the day up by about 1.4 percent.
Whereas Trump had the tax cut carrot to hold out in front of Wall Street in 2017, the bill has passed now. Standard and Poor’s 500 companies are expected to have seen a 17 percent boost in first quarter profits, but the stock market largely paid itself for that earnings boost ahead of time.
The president has been eager to take credit for the stock market’s rise and tout Wall Street’s performance when things are going well — but when it’s moving in the opposite direction, not so much. The problem, of course, is that he can’t take credit only for the good and ignore the bad, even though he would like to try.
Ben Hummel is an English and political science major and can be reached at
[email protected]
