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Will Impeachment Hurt The Stock Market? Maybe — But Not The Way Trump Says It Will, Business Professor Contends

President Donald Trump has suggested that an impeachment inquiry, looking into his actions during a telephone conversation with a foreign leader earlier this year, will cause harm to the country overall.

Photo by Steven Ryan/Getty Images

President Donald Trump has suggested that an impeachment inquiry, looking into his actions during a telephone conversation with a foreign leader earlier this year, will cause harm to the country overall.

In several tweets over the past month, Trump has even suggested that impeachment against him could cause the stock markets to falter. Last week, the president wrote, “the Impeachment Hoax is hurting our Stock Market.” And earlier in October, Trump suggested that impeachment could hurt the retirement plans of everyday Americans.

“All of this impeachment nonsense, which is going nowhere, is driving the Stock Market, and your 401K’s, down,” Trump wrote.

Is there any proof to Trump’s claims? Not really, the data suggests.

Take a look at when Speaker of the House Nancy Pelosi announced the inquiry’s beginnings, which happened on September 24. The following day, the Dow Jones Industrial Average closed 162 points higher, according to data compiled by MarketWatch.

Another recent event in the impeachment saga, by Trump’s accounts, should have resulted in a drop in the stock markets: a vote last Thursday to formalize how the inquiry would transition from a private to a public investigation. But that vote didn’t sour the Dow Jones either. From closing bell on Thursday to the end of Friday’s trading day the DJIA went up 301 points.

Impeachment doesn’t seem to have had a dramatic effect on how the markets behaved in the past two months, much less produced a negative reaction. If anything, Trump’s actions during the impeachment could prove to be meddlesome, according to one business professor.

“While many of President Trump’s policies have been pro-business — for instance reducing regulation and the corporate tax cuts — he has created an environment of virtually unprecedented uncertainty,” Robert Johnson, professor of Finance at Creighton University, said in an exclusive conversation with HillReporter.com. Trump’s uncertain actions, he maintained, could heighten difficulties for the markets in the future.

Johnson elaborated on his point, suggesting that impeachment could soften the uncertainty that Trump might create in the marketplace by weakening his resolve — or conversely, it could make him more volatile.

“One could argue that impeachment of President Trump may weaken his position and lead to policies that are less disruptive,” Johnson said. “But, with this President, all bets are off. It may embolden him to be even more resolute and amplify his unconventional style, furthering his position with his political base.”

Johnson conceded that there’s a small chance that removing Trump from office could be disruptive to the markets, too. “Having said that, however, in this consumer-driven economy, the likelihood of consumers changing their aggregate consumption habits because of Presidential politics seems remote,” he added.

Research on the matter shows that the markets do indeed respond to Trump’s outbursts more than they have so far with the announcement of an impeachment inquiry.

According to data collected and published in September by Bank of America Merrill Lynch, whenever Trump has a day in which he tweets in excess of 35 times, stocks tended to drop in value. When he’s more reserved — say, tweeting less than five times per day — the stock market reacted positively.

It’s unclear what the future will bring with regard to the stock market. But Trump’s contentions, that the impeachment proceedings against him will adversely affect stocks, hurting the American economy overall, are being made at this moment with no evidence to back them up.



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