What does Donald Trump’s COVID-19 Diagnosis Mean for the Stock Market?
On Thursday, October 1st, Donald Trump announced that he and the first lady, Melania Trump, tested positive for COVID-19. The public has continued to monitor his health closely, and though he seems to be improving, the potential instability of a sick president and the very fact the president has contracted COVID-19 could send shockwaves through the stock market.
After the Dow Jones Industrial Average (DOW) plunged a historic 8,000 points in the fastest fall in financial history, the United States economy has been on a fragile recovery since spring. Paired with the natural fluctuations the stock market goes through during a presidential election, the outlook for the stock market is uncertain. The S&P 500 has usually ended positive on an election year since 1928, though with current events, the stock market is volatile.
Donald Trump released the news of his diagnosis after markets closed on Thursday, but upon opening Friday morning, the markets reacted. The S&P 500 dropped to a low of about -1.5% in the middle of the day, though it closed down 1 percent, marking a relatively normal day. Compared to other presidential mishaps, this isn’t a large loss. When President Eisenhower had a heart attack in 1955, the S&P 500 dropped 6.6% in one day. The prospect of political instability makes investors nervous, and in turn, the markets react negatively. For example, when John F. Kennedy was killed in 1963, the S&P 500 plunged 2.8%. After 9/11, the NY Stock Exchange and the NASDAQ closed for 6 days to avoid huge losses, the longest shutdown since the Great Depression.
So what does this mean for the stock market? The outlook looks good. After Trump announced his return to the Oval Office, the DOW saw a jump of 465 points. The S&P 500 and the Nasdaq Composite also rose. However, if the president’s condition worsens or he dies, the market will no doubt react negatively. The president’s diagnosis puts the pandemic back into investor’s minds, and the markets will most likely react more to changes related to the pandemic. In such an unpredictable year, one unexpected event could send shockwaves through the market.
Works Cited
Carson, Ed. “Dow Jones Futures Signal Stock Market Rally On President Trump's Prognosis, Stimulus Deal Hopes.” Investor's Business Daily, Investor's Business Daily, 5 Oct. 2020, www.investors.com/market-trend/stock-market-today/president-trump-hospitalized-coronavirus-stock-market-rally-dow-jones-futures/.
Li, Yun. “Dow Jumps 350 Points on Optimism about Trump's Health and a New Stimulus Deal.” CNBC, CNBC, 5 Oct. 2020, www.cnbc.com/2020/10/04/stock-market-futures-open-to-close-news.html.
Phillips, Matt, and Eshe Nelson. “Stocks Fall After Trump Tests Positive for Covid-19.” The New York Times, The New York Times, 2 Oct. 2020, www.nytimes.com/2020/10/02/business/trump-covid-stock-market.html.
Shell, Adam. “Stock Impact of JFK Murder Steep but Short.” USA Today, Gannett Satellite Information Network, 22 Nov. 2013, www.usatoday.com/story/money/markets/2013/11/21/stock-market-reaction-to-jfk-assassination/3662171/.
Smith, Elliot. “What Trump's Coronavirus Diagnosis Could Mean for Markets.” CNBC, CNBC, 2 Oct. 2020, www.cnbc.com/2020/10/02/what-trumps-coronavirus-diagnosis-could-mean-for-markets.html.
It is great to hear our president is safe and sound, President Trump was lucky enough to contract a weak version of covid-19. It is really interesting to see how the health of the president can effect so much in our country, how when he went public with how he caught it it started to go down and right when he was being released it started going back up. it really shows how fragile the economy really is and how it can all come down by the health of one person.
ReplyDeleteIt would be interesting to compare the fall of the stock market when the president falls ill outside of a pandemic. I am wondering how much of the stock market's dive on friday could be due to the overall fear of the pandemic on top of the president getting sick. However, it is fascinating to see how Trump getting sick compares to other sudden health concerns of other presidents, including JFK and Eisenhower.
ReplyDeleteFirst of all, I thought that it was really interesting how an event that would happen to the president could affect the stock market and I never thought of that. I also thought that you did a really good job on pulling up different examples of events that happened in which the stock market has dropped just off of the president getting an illness or a situation happening in the US. Another thing was that you brought up how the market went down 1.5% because of the president having the virus and that seems very substantial because that is a pretty big drop for one day and even with it being the president it is crazy how one person getting a virus can affect the stock market so much. Overall, I thought that you did a great job on using a lot of evidence to support your claim and thought that this was a very interesting piece.
ReplyDeleteSuper intriguing topic. I love the idea of it. Something specifically I loved in this piece is the repetition of the S&P numbers. Those statistics I believe are vital to economic health so great job involving those. I wonder what gets affected by the presidents health when the economy gets hit. Like is there certain areas of the stock market that are affected or is it the stock market in general. Also very interesting to see how much the economy can be effected by a single persons health.
ReplyDeleteIt’s interesting to see how just one person can affect the stock market so much. You wrote that usually when a president is announced to have some sort of sickness or sudden issue, the stock market tends to drop that day. What causes this type of pattern? This is especially weird since presidents don’t have any immediate effects on businesses that make up the stock market. It’s not like when the president gets sick, businesses start selling less products. I think that with the recent drop caused by Trump getting Covid-19, it is because some people realized again just how dangerous this virus is and it can even affect people in positions of power like Trump. This might have caused fear and temporarily, the economy went down because less people were buying things.
ReplyDeleteIt is really interesting how health complications can translate into the economy. It’s surprising that the stocks are going up, but I guess investors are feeling more confident since the president is tweeting about his recovery, and he himself feels confident in fighting the virus. If this does escalate, it will be interesting to see how this will relate to the stock market changes due to health complications with other presidents in history, especially considering the changes in the stock market earlier this year due to the pandemic.
ReplyDeleteIt’s interesting to see how certain events, like Donald Trump’s COVID-19 diagnosis, can have a tremendous effect on our nation's economy. When you think about our nation's economy and how it trends, you usually consider long term trends, not short term changes like this. Truth be told, these kinds of volatile, short term spikes and changes to our economy happen quite often, and it's intriguing to see what kind of an effect they have, and how that effect varies from circumstance to circumstance, creating economic trends along with that. Although the effect caused by this particular event was negative, things rebounded quickly, and it's both good to see that the President is in good health, and that the economy is on a similarly healthy uptrend as well.
ReplyDeleteI found it very interesting that the health of President Trump actually impacts the stock market. I had no idea that the health or well being of the President can and has affected the stock market. But now thinking about it, it does make sense for the market to go down, as political instability is scary and can greatly affect businesses and industries, so there's no doubt that the stock market should react as a result of this. It’s good that he is okay and everything turned out well, but I wonder what would have happened if President Trump was in worse conditions and still in the hospital or if he died. Just how negatively would the stock market be affected if it already took a decent dip when he left the oval office? I just think it’s interesting to think about how the market reacts to the health of our leader’s because of how that can affect the economy.
ReplyDeleteI think it is very interesting that something like the health of the president can effect the stock market. I had no idea that they were even related. I really liked how you pulled so many different examples from different sources so that I could best form my opinion on how I feel on the subject. Hopefully, the economy and stock market can make a quick comeback from this defect of Trumps illness, which it has shown signs that it will be able to.
ReplyDeleteThe fact that one person has such an influence over the stock market and the lives of so many investors is sort of a shock. Obviously the President is the head of the United States and represents the nation, but for them to say or do one things causing a dramatic change in value of peoples portfolios makes the Presidency one of the hardest jobs in the world. Trump is recovering from the virus but I don't think economy can say the same because the pandemic is still very present and won't ever truly leave us. I think the US economy has a very bumpy road ahead of itself to recover.
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