Dow Defies Bears While Trump Warns of Stock Market Crash

Journalist:
Josiah Wilmoth @Y3llowb1ackbird
September 26, 2019

The Dow clung to its recovery during the week’s penultimate trading session as investors continued to feast on President Donald Trump’s claim that the US and China could sign a trade deal “sooner than you think.”

Meanwhile, Trump warned that Speaker Nancy Pelosi and House Democrats would cause a stock market crash if they pursue an impeachment gambit.

Dow Defends Yesterday’s Recovery, Edges Toward 27,000

Wall Street’s three major stock indices struggled on Thursday but fought to protect their recoveries from the previous session.

The Dow Jones Industrial Average ticked 2.79 points or 0.01% higher to 26,973.50.

The Dow traded sideways on Thursday, securing its gains from the previous day. | Source: Yahoo Finance

The S&P 500 dipped 6.61 points or 0.22%. The index was weighed down by the communication services sector, which plunged 0.85%.

The Nasdaq underperformed, dropping 32.70 points or 0.4% to 8,044.69.

Trump: Democrats’ Impeachment Strategy Will Ignite a Stock Market Crash

Trade war optimism thrust the markets into bullish territory, empowering the Dow to defend yesterday’s 162.94 point recovery. President Trump catalyzed that rally by dangling a tantalizing prospect to investors, hinting that China wants “a trade deal very badly” and that it “could happen sooner than you think.”

However, Trump later warned that his political opponents in Congress have set on a course that could bring the Dow Jones’ house of cards crumbling down.

Writing on Twitter earlier this morning, Trump alleged that House Democrats are flirting with a market meltdown by threatening his presidency with a formal impeachment inquiry. He said that stocks would crash if the House actually does impeach him.

“If they actually did this the markets would crash. Do you think it was luck that got us to the best Stock Market and Economy in our history. It wasn’t!”

However, Wall Street doesn’t seem fazed by that threat, and the Dow proved its resilience this morning even after the House released a redacted version of the whistleblower complaint that prompted Pelosi’s decision to back an impeachment inquiry.

Would Trump’s Impeachment Harm – or Help – the Dow?

Barring a bombshell revelation from that inquiry, Trump has sufficient support in the Senate that he doesn’t need to worry about being removed from office. His acquittal would likely embolden him and motivate his base, much like the release of the Mueller Report did.

Moreover, former President Bill Clinton’s impeachment proceedings correlated with a massive stock market bull run, which saw the S&P 500 surge 28% in a little less than 13 months.

The stock market roared in 1998 despite the Clinton impeachment. | Source: Yahoo Finance

Of course, that rally immediately preceded the apex of the dotcom bubble.

With removal from office an unlikely outcome, the most pertinent question regarding Trump’s impeachment fight is whether it would help him galvanize support leading up to the 2020 presidential election or damage him politically.

Either way, analysts say that there’s one ironclad way for Trump to inflate his approval rating (and the stock market) before Nov. 3, 2020: strike a trade deal – big or small – with China.

“The president’s approval rating has been tied to better news on China trade over the last year and a half,” Strategas policy analyst Dan Clifton told CNBC. He needs to govern and start showing accomplishments. China is the best way for him to do that.”

Click here for a real-time Dow Jones Industrial Average chart.

This article was edited by Samburaj Das.

Josiah Wilmoth @Y3llowb1ackbird

Josiah is the US Editor at CCN, where he focuses on financial markets. He has written over 2,000 articles since joining CCN in 2014. His work has also been featured on ZeroHedge, Yahoo Finance, and Investing.com. He lives in rural Virginia. Follow him on Twitter @y3llowb1ackbird or email him directly at josiah.wilmoth(at)ccn.com.