- US President Donald Trump attempted to link the possibility that House Democrats could investigate him to a recent downturn in stocks.
- “The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!” Trump tweeted Monday.
- After taking back the House in the midterm elections, Democrats could now look into the president’s tax returns – and with them his finances and potential conflicts of interest.
- But while investigations are a real possibility, most market analysts attribute the recent decline not to election results, but to weak guidance by major companies and fears of trade-war escalation.
US President Donald Trump on Monday attempted to pin a recent decline in stocks on Democrats, baselessly blaming the possibility of investigations by House committees.
“The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!” Trump tweeted.
The Dow Jones Industrial Average was down by just over 400 points as of 11:30 a.m. ET.
While the stock market has been on rough footing lately, most analysts attribute the issues to major companies signalling weaker-than-expected future earnings and continued trade-war fears, rather than the results of the midterm elections, in which Democrats won control of the House and the GOP held the Senate as expected.
Analysts say the likelihood of gridlock with a divided Congress is a neutral result for stocks and is likely to have little impact.
But Trump has for weeks claimed that a Democratic victory in the midterms would be negative for stocks, and he increased his focus on the market in the run-up to Election Day last Tuesday.
Following the midterms, Trump has doubled down on arguing that there is no reason for investigations into possible connections between his campaign and Russia and that his tax returns shouldn’t be released.
But the biggest political problem for markets may be of Trump’s own making. Analysts have cited continued pressure from the president’s trade war and the possibility that the conflict could escalate as among the biggest threats to the market’s continued growth.
“This trade issue is clearly the wild card for both the global economy and investing,” David Kelly, the chief global strategist at JPMorgan Funds, wrote in a note to clients.
He added: “If 2019 brings with it a major escalation in the trade conflict with China, with no resolution in sight, it would be a significant negative for global stocks and US stocks and could lead to a higher dollar and lower interest rates.”