If re-election is the aim of Donald Trump, then owning the stock market rally of 2017 may be his biggest blunder yet. Here’s why. | Source: REUTERS / Jonathan Ernst
If re-election is the aim of Donald Trump, then owning the stock market rally of 2017 may be his biggest blunder yet.
Historically, presidents of all persuasions have avoided taking credit for Wall Street’s gains because they don’t want to be weighed down by its declines. For Donald Trump, the opportunity to distance himself from the stock market has already passed.
The so-called ‘Trump bump’ is now a bumpy ride. If bond markets are a sign of things to come, the U.S. president may soon be anchored down by recession. And that’s not good for any re-election bid.
Stock Market’s Performance Under Trump
The U.S. stock market has performed exceptionally well since Trump was elected, with the Dow Jones Industrial Average (DJIA) rallying nearly 40% between November 2016 and the present. But the Dow index has lost more than 1,000 points from its most recent high and is no longer shattering records at the same pace as before.
In fact, the so-called Trump reflation trade has been dead for at least a year. The Dow is barely up on an annual basis, and the gains it accrued in 2019 are largely on the back of rate-cut expectations.
Under Trump’s watch, stocks experienced their biggest correction since the 2008-09 financial crisis, with the S&P 500, Nasdaq and small-cap Russell 2000 officially entering bear markets in late 2018. The Dow narrowly escaped that fate,