The Sensitive Topic of Stock Market Performance
The stock market has long been a sensitive topic for former President Donald Trump, who often touts his administration’s record highs as a measure of success. However, a closer examination reveals that Trump’s impact on the market is more nuanced, with his attacks on individual companies and industries often leading to significant losses.
The Well-Documented Effects of Trump’s Tantrums
Trump’s tantrums are nothing new, and their effects on the market are well-documented. After he attacked Taiwan’s semiconductor manufacturers, questioning whether the U.S. should defend Taiwan militarily, Taiwan Semiconductor (TSMC) plummeted 15%, and the broader semiconductor index fell 10%. Similarly, his aggressive remarks against large U.S. tech companies exacerbated a tech sell-off, with the Nasdaq 100 falling nearly 10% and erasing over $1.7 trillion in wealth.
The Limited Benefits of a Trump Win
The losses in market value from Trump’s attacks far outweigh the few isolated pockets of the market that have benefited from the prospect of a Trump win. Sectors that have been heavily regulated under the Biden administration, such as private prisons, predatory lenders, and gun manufacturers, have seen initial gains, but these have largely been reversed over time.
A History of Capricious Targeting
Trump’s capricious targeting of companies and industries is not a new phenomenon. There’s a long trail of cases dating back to his first term, when his abrupt social media pronouncements, offhand remarks, or unexpected policy shifts sank the stocks of his unfortunate targets. Markets crave predictability, which is the antithesis of Trump’s modus operandi.
Examples of the “Trump Dump” Effect
Harley-Davidson dropped nearly 10% over two days in June 2018 after Trump tweeted threats to increase taxes on the company for supposedly outsourcing. Similarly, Delta Airlines‘ stock fell nearly 10% over two days after bizarre Trump tweets implying that the airline was to blame for the botched implementation of his travel ban and associated long delays at airports.
