- President Donald Trump finally weighed in on the recent stock market volatility in a tweet Wednesday.
- Trump said the market dropped because of “good news” about wages and the economy, partially what economists have suggested as well.
- Trump had stayed silent about the market since the Dow Jones industrial average’s largest-ever one-day point drop on Monday.
President Donald Trump on Wednesday broke his silence about the stock market’s recent tumbles and volatility, arguing on Twitter that the decline was a “big mistake” that happened amid a strengthening US economy.
“In the ‘old days,’ when good news was reported, the Stock Market would go up,” Trump said. “Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!”
The Dow Jones industrial average fell nearly 1,200 points on Monday, its largest-ever one-day point drop. Though it was relatively small on a percentage basis, it triggered concern from investors about the market’s stability.
Members of Trump’s administration have attempted to deflect that concern, but the president had not weighed in on the recent slide, despite his frequently touting the stock market’s rise during his first full year in office.
Trump’s tweet echoed an argument from administration officials, some Republican lawmakers, and market analysts that improving wages and inflation trends may have spooked investors who fear the economy strengthening too much, or overheating.
For the past few years, the US economy has seen a gradual improvement in labour market and economic conditions, along with low inflation. On Friday, however, a pickup in wages reflected in January’s jobs report, along with other concerns about the future of inflation, led to speculation that the Federal Reserve would increase its pace of interest-rate hikes, which could tamp down economic growth and diminish future market returns.
Increased wage inflation could also eat into companies’ earnings – and stock moves are based partially on expectations of those future earnings.
Economists and analysts have pointed to other reasons for the drop, such as technical selling due to pressure in some volatility products and algorithmic selling.
While the sell-off was particularly intense on Friday and Monday, the major US stock market indexes had been sliding since their most recent highs, on January 26.
Trump’s silence on the market was notable given how much the president has touted stock surges. An analysis by Business Insider found that Trump typically tweets about the market every 6.5 days. Before Wednesday’s tweet, he had not done so since January 20.
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