Economic History Trump Market Guide

Trump Term #1 Pre-COVID

Track SPY volatility through Trump Term #1 before COVID from January 2017 through January 2020.

Section: Economics Period: 01/2017-01/2020 Published: 2026-03-07 Updated: 2026-03-07

Trump Term #1 pre-covid 1/2017-1/2020

SPY Up Days
Dec 26, 2018: +4.96%	Jan 04, 2019: +3.43%	Mar 26, 2018: +2.72%	Oct 16, 2018: +2.15%
Jun 04, 2019: +2.15%	Nov 07, 2018: +2.12%

SPY Down Days
Oct 10, 2018: -3.28%	Dec 04, 2018: -3.24%	Oct 24, 2018: -3.09%	Aug 05, 2019: -2.98%
Aug 14, 2019: -2.93%	Dec 24, 2018: -2.71%	Aug 23, 2019: -2.59%	Mar 22, 2018: -2.51%
Jan 03, 2019: -2.47%	May 13, 2019: -2.41%	Dec 07, 2018: -2.33%	Apr 02, 2018: -2.23%
Apr 06, 2018: -2.19%	Feb 02, 2018: -2.12%	Mar 23, 2018: -2.10%	Dec 17, 2018: -2.08%
Dec 21, 2018: -2.06%	Oct 11, 2018: -2.06%

Summary

Despite the overwhelming amount of downwards volatile days during Trump’s first term, the stock market performed rather well, until COVID. A large chunk of the volatile days can simply be attributed to tariffs, particularly against China, and the constant back & forth of near resolutions or reciprocal tariffs. Considering how crucial Chinese manufacturing was to so many American companies, the degree of stress and fallout from this conflict cannot be understated. Trump was also the first president to “weaponize” social media as a tool for moving markets, which, starting with Amazon as the first significant success, he would continue to use into his second term as well. Open conflicts with the FED’s decision to hike rates in October of 2018 took place on Twitter, rather than in backrooms as they probably had been in the old days.

Key Data to Keep Track of:

Trump’s social media account
Government statements on Trump’s executive decisions
Corporate earnings reports
FED announcements and comments

2018

February: Feb 2nd (-2.12%)

Trump’s first full year in office passed without any serious volatility. What investors did not realize was things were only just about to begin sliding up, down, and out of control for the rest of the presidency. On 2/2 news that was good for the average American was bad for Wallstreet came out: a good jobs report that was translating into rising wages for American workers, though the gut reaction to this news was fears about rising inflation (rate hikes). Concerns over cheap global central bank money going away seems to have been even more pressing and the pace was expected to accelerate alongside the jobs report.

March: Mar 22nd (-2.51%), Mar 23rd (-2.10%), Mar 26th (+2.72%)

3/22 opened with renewed worries about a trade war. The Trump administration unveiled tariffs intended to punish China for intellectual property theft, in addition to tariffs on aluminium and steel imports just the month before. Tech stocks were also selling off, in light of the Cambridge Analytica leak from Facebook. Facebook CEO Mark Zuckerberg broke his silence over the news, telling CNN it had been “a major breach of trust, and I’m really sorry that this happened.” Selling continued on 3/23, mostly in the fallout of the tariff news from the day before. 3/23 was also a Friday, so stress about what would happen going into the weekend also played its part. China also threatened to issue tariffs on U.S. 128 products, should negotiations with the US fail to be reached, as well as threatening legal action through the World Trade Organization (this seems to have gone nowhere). That same morning, before market open, Trump threatened to veto the $1.5 trillion omnibus spending bill on Twitter: “am considering a VETO of the Omnibus Spending Bill based on the fact that the 800,000 plus DACA recipients have been totally abandoned by the Democrats (not even mentioned in Bill) and the BORDER WALL, which is desperately needed for our National Defense, is not fully funded.” Later that SAME day, Trump signed the bill, commenting “I will never sign a bill like this again. As a matter of national security, I’ve signed this omnibus bill.”. Markets bounced towards close based on this change of plans.

In an attempt to slow down an impending trade war, on 3/26, both China and the US went into negotiations. China agreed to buy more semiconductors from the U.S., in order to cut the trade surplus, shooting up shares of both Intel & Qualcomm and ease American access into Chinese markets. Most investors were under the impression that the tit for tat tariff schemes were not intended to last forever and were a means of leverage for negotiations. At this stage, it was really just talks, but at least investors were relieved things would not escalate into a full out war.

April: Apr 2nd(-2.23%), Apr 6th (-2.19%)

4/2 was one of the first substantial instances of Trump using social media for economic warfare: a significant factor in the market slump was due to a tweet directed towards Amazon. The contents of the tweet are as follows: Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country...not a level playing field! This tweet was made about an hour before markets opened. Amazon’s stock dropped 5.2% in its wake. This was not the only factor in the day's drop, China issued import duties on pork and fruit coming from the United States, sending Tyson down over 6%, and Intel also dropped 6% following news that Apple was planning on discontinuing the use of Intel chips in its computers. It's worth mentioning that rate hike concerns were also brewing.

4/6 saw Trump returning to Twitter, this time against China, complaining: “China, which is a great economic power, is considered a Developing Nation within the World Trade Organization. They therefore get tremendous perks and advantages, especially over the U.S. Does anybody think this is fair. We were badly represented. The WTO is unfair to U.S.” He also threatened to triple the amount of Chinese goods that will be subject to new tariffs, which could potentially amount to $100 billion, though that was done through official channels. There appears to have been a constant back and forth in government statements and tweets, jumping from conciliatory to aggressive over the course of the previous week. Making matters worse was a March jobs report that added 103,000 jobs, a weaker turnout than in the months before.

October: Oct 10th (-3.28%), Oct 11th (-2.06%), Oct 16th(+2.15%), Oct 24th (-3.09%)

Rate hikes had finally begun with 10/10 being the worst of a 5 day consecutive loss streak. Inflation was on the rise and concerns that the Fed was planning to tighten monetary policy triggered another wave of selling. Tech companies were hurt the most, with Trump’s trade conflict with China being cited as one of the blames, mostly due to tech that relies on China for manufacturing. It didn’t help that the trade conflict was unresolved, and whereas some form of agreement was made with other nations, China remained unsettled. An interesting series of quotes was attributed to Trump that day, with the last one being the most interesting.“The Fed is making a mistake,” he said when asked by reporters about the market drop, “I think the Fed has gone crazy.” He described the recent selling as “a correction that we’ve been waiting for, for a long time.” Not sure who “we” is. That same day, the Treasury Department issued new rules that made it easier to block foreign investments in technology companies on national security grounds, which was primarily aimed at stopping China from gaining access to American technology. The selling continued the following day, 10/11. By and large, markets fell for the same reason they had the day before. Asian markets dropped considerably before American ones opened at least 4% or more across the board. The only other news being that the Department of Energy would tighten controls on Chinese imports of civil nuclear technology and the Fed said it would continue to increase interest rates and tighten its balance sheet, despite receiving criticism from Trump about it.

10/16’s reversal was mostly attributable to both Morgan Stanley and Goldman Sachs reporting earnings that topped Wallstreet’s expectations. In addition to this, U.S. industrial production rose month over month and a sentiment survey of Home Builders indicated a small uptick. In light of the recent selling leading up to that day, it didn’t take much good news to bring buyers back. By 10/24, another sell-off was triggered due to multiple tech companies missing earnings. ATT dropped 8% after missing earnings and Netflix dropped over 9% after valuation concerns began to set in. New home sales dropped to a two year low following interest rate hikes, and there seems to have been ongoing concern over a spending conflict in Europe between the EU and Italy, as well as criticism towards Saudi Arabia over the killing of Khashoggi. 100 S&P companies were due to announce earnings that week and it seems that the bearish atmosphere of October seems to have spooked investors rather than inspired confidence. Despite the attitude, from the companies that had reported, 80% of them had beaten expectations.

November: Nov 7th (+2.12%)

“With the conclusion of this year’s midterm elections, the cloud of uncertainty has been lifted, allowing stocks to resume their recovery from the October sell-off,” said Sam Stovall, chief of U.S. equity strategy at CFRA. With the outcome of midterms crystallized (Democrats take over house and Republicans keep Senate) markets seemed comfortable buying. Why exactly a divided political system triggered a rise in stock prices is difficult to say, especially since the referenced article mentions multiple times that political stagnation was expected, with one interviewee, Michael Farr, commenting: He expects that House Democrats will not be friendly to the financial sector.

“Waters as new chair of the House Financial Services Committee is no friend to Wall Street,” Farr said. “Those companies will have to watch their backs.” The only silver lining was that both parties were willing to collaborate on infrastructure. Perhaps the uncertainty behind the midterm elections was the only reason the market went up after they were concluded.

December: Dec 4th (-3.24%), Dec 7th (-2.33%), Dec 17th (-2.08%), Dec 21st (-2.06%), Dec 24th (-2.71%), Dec 26th (+4.96%)

The drop on 12/4 was primarily attributed to a “bond market phenomenon”, specifically, a yield curve inversion was close at hand, following the yield of a three year Treasury note surpassing the value of its five year note counterpart. Since the two year yield had not surpassed the ten year, many investors were not completely scared off. Stocks hit their daily lows after the CEO of Doubeline Capital, Jeffrey Gundlach, commented that the inversion signalled an economy poised to weaken. China and the US had not ended their trading spat, with negotiations still ongoing. Trump made an interesting tweet that day, which probably did not help markets, commenting “President Xi and I want this deal to happen, and it probably will. But if not remember,...... I am a Tariff Man.” By 12/7 2018’s gains had been wiped out. A key contributor was a weaker than expected jobs report, where Wall Street expected a gain of 198,000 jobs, only 155,000 were added. Federal prosecutors were also expected to bring charges against Chinese hackers who were trying to break into technology service providers, another negative headline that did little to increase optimism about the ongoing trade negotiations. Just the day before, Huawei’s CFO had been arrested in conjunction with this investigation.

12/17 brought markets to a new 2018 low. Continued anxiety about the Federal Reserve’s upcoming interest rate meeting later that week played the largest role in bringing markets down that day. The Empire State manufacturing index fell substantially, alongside a survey of American homebuilders, who were certain all but certain mortgage rate increases would hurt home sales. The uncertainty of how much rates would go up was the big question. Trump took to Twitter encouraging the Fed not to increase rates, but this does not seem to have affected markets. 12/21 topped off the worst market week since 2008. Two days prior, the Fed brought rates up, which continued the sell off that started on 12/17. The rate hike was small, only .25%, but Jerome Powell’s commitment to shrinking the balance sheet seems to have been what really spooked investors. An active government shutdown was seemingly nowhere near ending and Trump’s tweets seem to have made matters worse, commenting: ”....... If the Dems vote no, there will be a shutdown that will last for a very long time. People don’t want Open Borders and Crime!” To make matters even worse, Peter Navarro, Trump’s trade advisor, commented that it would be difficult for the two countries to come to a permanent economic agreement before the 90-day ceasefire expires.

12/24 did not come with Christmas spirit, in fact, it was the worst Christmas Eve ever recorded. This marks one of the recorded instances of Trump attempting to remove Jerome Powell from office. Markets opened down after a comment from Treasury Secretary Mnuchin stated he had checked the health of the country’s largest banks, but he was assured by bank executives that liquidity was ample and by late morning, markets recovered. Trump, however, dropped a Twitter nuke, sending markets to new lows:“The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch - he can’t putt!” Many of the aforementioned factors contributing to December’s volatility had still not been resolved and markets were still headline sensitive. The CNN article closes with a prophetic comment: Still, some market veterans argue that a panicky Wall Street is prematurely pricing in a recession that may not hit until 2020. 12/26 came with an actual, one day late, Christmas miracle. The Dow logged its largest single day gain in history. The primary catalyst for the gains was a report released by Mastercard’s SpendingPulse, which showed that retailers had their best holiday season in six years. Amazon jumped 9% alone, after claiming it had sold a record number of items as well. Crude oil jumped 8%, sending oil producers up by a huge margin; energy and retail stocks were the primary beneficiaries of the day. The sheer size of the move was almost certainly helped by the sell offs throughout the month that brought both bargain hunters and an opportunity for a short squeeze.

2019

January: Jan 3rd (-2.47%), Jan 4th(+3.43%)

Tech stocks led the decline on 1/3, primarily due to a rapid slowdown of iPhone sales in China. This affirmed fears that China’s manufacturing and consumer sectors were declining, potentially causing a ripple effect throughout the global economy. The ongoing trade war between China and the US was cited as a contributing factor, which played a big role in China’s slide into bear market territory throughout 2018. Companies like Boeing and Caterpillar and others that do much of their business in China, also slid. In addition to that, another weaker than expected U.S. manufacturing sector report. 1/4 bought up all the losses of the previous day, thanks to a booming jobs market report. The U.S. economy added 312,000 jobs in December, blowing past expectations of 176,000. In light of the beatdown the market had endured since the last quarter of 2018, Jerome Powell suggested that a pause in rate hikes was on the table, so long as low inflation numbers continued. He also mentioned that the bank could change its balance sheet reduction plan if it was causing problems to the U.S. economy. Both Intel and Netflix were upgraded by analysts, to buy and conviction buy, respectively and China’s commerce minister announced higher level negotiations would take place on 1/7 and 1/8.

May: May 13th (-2.41%)

Trump dropped a tweet in response to another set of tariffs issued by China, which decided to place $60 billion in tariffs on U.S. goods, primarily on agricultural goods. “I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!” The move by China was done in retaliation to additional tariffs issued by Trump the week before. Markets were on track to trade much lower, but bounced off their lows after Trump announced he had not yet decided on whether or not he would slap an additional $325 billion in tariffs on Chinese goods. Not the most inspiring, though the hesitation alone seems to have provided some degree of confidence that matters would not get immediately worse.

June: Jun 4th(+2.15%)

Markets appeared to have suffered throughout the course of May, as Jerome Powell signaled that the Fed was open to easing monetary policy in order to save the economy. Citing the ongoing trade war, Powell mentioned that its impacts on the US economy were being monitored, suggesting that policy would be adjusted if conditions continued to deteriorate. Instead of talking about rate hikes, markets were now expecting a rate cut, with 90% confidence. Trade tensions were also cooled, following speculation that Republican lawmakers would block Trump’s efforts to implement new tariffs against Mexico on a national emergency basis. Mexican foreign minister Marcelo Ebrard also said he expected both countries to find common ground on immigration and trade. Finally, the Chinese Commerce Ministry was seemingly easing up on its tough rhetoric towards a trade agreement.

August: Aug 5th (-2.98%), Aug 14th (-2.93%), Aug 23th (-2.59%)

8/5 opened with the worst drop of 2019, once again, as a result of the still ongoing trade war. A six day sell off had been set off the week before, following another set of tariffs issued by Trump against China. Once again, China retaliated, this time by allowing its currency to drop to the lowest level against the dollar in over a decade. Trump took to Twitter before markets opened commenting: “China dropped the price of their currency to an almost a historic low. It’s called “currency manipulation.” Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!” The fact that the Chinese government was now moving to currency depreciation to boost exports suggested that it had begun to abandon hopes of reaching a trade deal with the U.S. It also suspended the purchase of U.S. agricultural products and threatened to institute tariffs on farm goods purchased after August 3rd. 8/14 saw a brief dip into yield curve inversion, this time as a result of the 10 year note breaking under the value of a 2 year note. This inversion in particular was known to be a very reliable recession indicator. According to the article, a recession typically occurs within 22 months, one did temporarily occur, but much faster and for a reason that no one expected. Trump commented on the yield curve, but at least had the decency not to do so before the market open: “........THANK YOU to clueless Jay Powell and the Federal Reserve. Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!”

8/23 It’s nauseating to keep saying it, but Trump once again brought markets to their knees after ordering U.S. manufacturers to find alternatives to their operations in China, following another round of tariffs being placed on U.S. goods. Per Trump’s Twitter: “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States.” The order was unprecedented and likely outside of the powers of a President, but given how seemingly extreme they were, it reinforced the idea that a meaningful resolution to the nearly one year old trade dispute was still far away. Powell also made a few comments concerning monetary policy, all of which was rather vague, and did nothing to clarify the stance of the Fed in light of the trade war and economic expansion plans. The 10y and 2y notes once again briefly dipped into yield curve inversion territory.

InfoLib

Trump Term #1 Pre-COVID

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