Donald Trump loved the stock market when it worked in his favor. During his first term, he made sure everyone knew when the S&P 500 hit new highs. But things have changed.
Since returning to the White House in January, the president has been unusually quiet about Wall Street, even when the market briefly hit a record on February 19. Now? The S&P 500 has fallen almost every day, sinking below the level it was at when he took office in January.
Other indexes tied to the real economy are sliding, and Bitcoin, which once rode the Trump wave, has dropped 20% in a month.
Markets react as investor confidence tumbles
Stocks are moving differently than they did in Trump’s first term. In 2017, the economy was still recovering from an energy crisis, and interest rates were four percentage points lower than they are now.
The Federal Reserve was trying to pump life into the markets, and when Trump unleashed tax cuts, stocks took off. The S&P 500 saw two consecutive years of more than 20% growth in 2023 and 2024—the first time that had happened since 1996.
But markets can’t keep climbing forever. Now, valuations are sky-high, and the stocks that fueled the last rally aren’t pulling their weight.
The Magnificent Seven, the elite group of AI-driven tech stocks that have dominated markets, make up about a third of the S&P 500’s total value. But they’re no longer pushing things upward. Nvidia, the AI chip powerhouse, has dropped nearly 10% since Trump’s inauguration. Only two out of 11 sectors in the S&P 500 are in the red this year, and tech is one of them.
Trump’s new tariffs shake global markets
Andrew Brenner, head of international fixed income at National Alliance Securities, summed up the mood among traders. “The tariff rhetoric has become daily and extreme, sentiment is awful and trading is on edge.”
On Thursday, Trump reignited trade war fears by announcing a new 10% tariff on Chinese imports, set to take effect on March 4, and also confirmed plans for tariffs on Canada and Mexico, keeping investors on edge about future trade disputes.
The Nasdaq, which is heavy with tech stocks, has already lost 4% this month. European markets felt the pressure too. Germany’s DAX and the Stoxx Europe 600 opened lower on the news, while Japan’s Nikkei 225 dropped 2.9%, South Korea’s Kospi fell 3.4%, and Hong Kong’s Hang Seng index slid 3.3%. Even China’s CSI 300 benchmark lost 2%.
Almost 90 percent of survey respondents said that stocks are overvalued. The CBOE Skew Index, which measures how much investors are girding for a sell-off by tracking trades in options markets that would buffer against a sudden plunge in the value of the S&P 500, reached its highest level ever on February 18, the day before that index hit its record high.
The Federal Reserve Bank of Atlanta revised its first-quarter GDP forecast, now expecting the U.S. economy to shrink by 1.5%. That’s a sharp turnaround from its previous forecast of 2.3% growth just two weeks ago. Trump’s economic policies are already having a measurable impact, and traders are scrambling to adjust.
Late rally gives temporary relief, but concerns are still there
Friday brought some relief to the markets. The S&P 500 closed 1.6% higher, cutting its February decline to 1.4%. The Nasdaq also rose 1.6%. Nvidia rebounded 4% after an 8.4% drop on Thursday, though its recent losses have raised questions about the strength of the AI boom.
European markets recovered as well. Germany’s DAX and the Stoxx Europe 600 ended the day flat, regaining earlier losses.
Then on Friday, during a tense Oval meeting, Trump accused Ukraine’s President Volodymyr Zelenskyy of “gambling with World War Three,” then chastised him and kicked him out of the White House, canceling their economic partnership and the joint press conference they had planned later in the day.
Later on Truth Social, Trump said, “We had a very meaningful meeting in the White House today. Much was learned that could never be understood without conversation under such fire and pressure. It’s amazing what comes out through emotion, and I have determined that President Zelenskyy is not ready for Peace if America is involved, because he feels our involvement gives him a big advantage in negotiations. I don’t want advantage, I want PEACE. He disrespected the United States of America in its cherished Oval Office. He can come back when he is ready for Peace.”
Despite everything, Trump told supporters in Miami on February 19, “I think the stock market’s going to be great.” But he also exaggerated the numbers, claiming the Dow had jumped 10% since his election when the actual increase was less than 7%. The S&P 500 surged by 6.25% between election night (November 5) and February 19, but now it’s up by only 3% since November 5.
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Source: https://www.cryptopolitan.com/president-trump-doesnt-like-wall-street-very-much-anymore/