Stock Markets Still Unsure About This Whole Donald Trump Thing


Stock indexes declined in the immediate wake of President Trump’s inauguration speech today when the former reality TV star’s rhetoric about protectionist trade policy started a selloff.

“We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs,” Trump said in a short speech marked by dark imagery and populist rage. “Protection will lead to great prosperity and strength.”

The S&P 500 and Nasdaq both recorded losses from the moment Trump began to speak. Immediately after his remarks, the Dow Jones Industrial Average slipped 40 points. Although all three indexes ended the day higher than when trading opened, and had gains on the week as a whole, the dip was quite noticeable in graphic format.

Here’s a picture of the DJIA via Bob Bryan at Markets Insider:

Here’s a graph of the day’s action on the S&P via CNBC and

Wall Street saw stock prices go up immediately after the presidential election. Trump’s plans to boost federal stimulus spending, deregulate industries, and let corporations pay even less taxes than their already-low effective rate were all very popular with analysts.

But continuing worries that Trump’s economic and monetary instincts will lead to recession have kept a lid on that speculation in recent weeks. Protectionist tariffs have an unsettling history, taking partial blame for both World War II and the Great Depression. At the very least, Trump’s proposal to tax foreign-made goods at the border would inevitably mean higher prices for American consumers.

Overturning the Affordable Care Act would also put 30 million Americans off their health insurance, likely leading to a surge of medical bankruptcies and reduced consumer spending.

Among Trump’s first actions in office has been to cancel a price cut for homeowner’s insurance through the Federal Housing Administration. The move will cost at least 750,000 families hundreds or thousands of dollars this year — money they will not spend on other things.

Days before the election, more than 370 economists wrote an open letter in the Wall Street Journal to warn American voters that Trump places “magical thinking and conspiracy theories over sober assessments of feasible economic policy options.” A second group of Nobel laureate economists declared his agenda “incoherent.”

But their pleas had no effect on voters in the three Midwestern states that swung the election to Trump. Instead, rural white citizens were impressed by his promises, however contradictory or insensible, because Trump directed their anger at all the right enemies: immigrants, minorities, and liberals.

It may work on Main Street, but Wall Street is still understandably skeptical.

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