Stock Market Refuses to Cooperate With Trump's ‘Up Big’ Call
The S&P 500 is trading around the same level where it was in January 2018 when he touched off conflicts with trading partners.
(Bloomberg) -- President Donald Trump was reminded Wednesday of something investors have known for decades: it’s hard to predict the market.
About 90 minutes into the session, Trump, after being asked about trade negotiations with China, struck an optimistic tone, saying of the stock market: “it’s going to be up big today, it looks like.”
It wasn’t. The Dow Jones Industrial Average closed down 23 points.
“The president is trying to get not only the country but also the market in believing that he’s going to reach a deal with China,” Robert Pavlik, the chief investment strategist at SlateStone Wealth, said by phone. “The Street realizes there are no details yet.”
The president got a taste of another market truth: his ability to lift stocks isn’t what it used to be. The S&P 500 is trading around the same level where it was in January 2018 when he touched off conflicts with major trading partners. That’s in contrast with his first year, when deregulation and tax cuts unleashed animal spirits, sending the benchmark to 15 straight months of positive returns including dividends.
For a brief moment Wednesday, it worked. The Dow climbed, turning positive after Trump said a deal with China probably will not be signed until he meets with Chinese President Xi Jinping at the APEC summit next month in Chile. Those gains didn’t last and the benchmark closed lower for the second time in three days.
Trump has proved more prescient in the past. On Christmas Day, he said American shares were offering investors “a tremendous opportunity to buy.” The Dow surged 5% the next day to embark on a rally that sent the index up almost 20% over the next three months.
Still, Pavlik at SlateStone said he wouldn’t follow Trump’s stock advice because it’s driven by political agendas, rather than fundamental analysis.
“He’s a speculator,” Pavlik said. “He’s acting as a role of a cheerleader for the country.”
--With assistance from Justin Sink.
To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net
To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Chris Nagi
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