‘The president clearly set himself up’: Trump’s stock market miscalculation

NEW YORK — President Donald Trump is learning a basic and painful lesson of Wall Street: Stocks also go down.

A global market sell-off accelerated Monday with the Dow Jones Industrial Average plunging nearly 1,600 points at one point in roller-coaster afternoon trading. After a volatile session, the Dow ended down 1,175 points, or 4.6%, at 24,346.

It was the largest ever single-day point drop for the Dow and it rattled both Wall Street and Washington, abruptly ending a remarkable period of placid markets where it often seemed the only direction was up. A young generation of Wall Street traders has never seen the kind of whipsaw action that seized markets Monday.

While the point drop was the largest, Monday’s decline did not rival some of the bloodiest days in Wall Street history given how fast the Dow has raced ahead in recent years. On Oct. 19, 1987, the notorious “Black Monday,” the blue chip average gave up nearly 23 percent of its value. On Sept. 29, 2008, in the depths of the financial crisis, the Dow sank nearly 7 percent.

But it was still a large and shocking decline. It arrived amid growing concern that an economy juiced by a massive corporate tax cut, and already at full employment, could overheat and require forceful action from a new and untested Federal Reserve chairman — installed by Trump — to cool things down.

On top of concerns about rising inflation, the tax cuts are already increasing the federal government’s need to borrow and accelerating the date by which Congress must raise the federal debt limit. And as of Monday, there was still no plan in Washington to raise the limit and avoid a catastrophic default.

The result is that a president who tossed aside traditional presidential caution in cheerleading the stock market now stands poised to take the blame for any correction.

 

 

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