After a stunning sell-off that ranks with the most violent ever, the Trump bull market — punctuated by his trademark tweets — is being laid low by a worldwide pandemic that threatens to sink the global economy. The Dow Jones Industrial Average has lost more than 30% of its value in just over a month, wiping out all its gains since Trump was inaugurated three years ago and putting the rally since Election Day in jeopardy.
It’s a remarkable comedown for a president, and a market, that had been able to weather everything that came their way. Neither impeachment nor the trade war with China could knock either one off their pedestals. But now, with the human toll of the coronavirus outbreak getting worse by the day and the world grinding to a halt, one of Trump’s most compelling selling points for his 2020 re-election — a strong U.S. economy backed by a roaring stock market — has all but unraveled.
“The old adage is, if you’re a president, don’t talk about the stock market — it can be a fickle friend,” said Steve Chiavarone, portfolio manager and equity strategist with Federated Hermes. “Trump absolutely has in a lot of ways used the stock market as a report card for his economic policies. In so far as that was the appropriate measure, the marks were pretty good — until now.”
To be sure, the market surged as soon as Trump was elected, adding close to 8% in the 2 1/2 months before his inauguration, and could of course rise again. Gains could quickly build should the virus’s spread be arrested, for instance. Right now, however, the president and his administration are dealing with a crisis and, in this environment, the market is reacting more to outbreak headlines and emerging liquidity needs rather than acting as a referendum on the president’s policies, said Chiavarone.
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