Will the Dow Jones Crash if Trump Is Impeached?



The Dow Jones Index (DIA) and S&P 500 (SPY) are trading at record highs and on Friday the Dow Jones crossed the 28,000 level for the first time. Meanwhile, President Donald Trump believes that his impeachment would lead to a big stock market crash. Is that the case? We’ll explore that in this article.

Article continues below advertisement

Dow Jones & S&P 500 and Trump’s tweets

Dow Jones crossed the 28,000 level for the first time on Friday. The S&P 500 and Nasdaq Composite Index are trading near record highs, too. President Trump generally does not miss an opportunity to tout stock market milestones. Also, this time, the president promptly tweeted about the Dow Jones’ latest milestone.

However, in the same breath, Trump issued a warning. Trump tweeted, “Dow hits 28,000 – FIRST TIME EVER, HIGHEST EVER! Gee, Pelosi & Schitt have a good idea, ‘lets Impeach the President.’ If something like that ever happened, it would lead to the biggest FALL in Market History. It’s called a Depression, not a Recession! So much for 401-K’s & Jobs!”

Notably, this is not the first time that Trump has said that his impeachment would trigger a stock market crash. However, this time the president is predicting the biggest fall and a depression. So far, the Dow Jones Index and S&P 500 have performed well under Trump’s presidency. The tax cuts and the administration’s supportive fiscal policies have helped stock markets. That said, would Trump’s impeachment really trigger a big stock market crash?

Article continues below advertisement

Trump and Dow Jones

To be sure, Trump’s surprise 2016 election led to uncertainty amongst investors. On one hand, Trump’s pro-business stance was positive for equity markets. However, there was also the contentious agenda of tariffs and protectionist trade policies. Incidentally, there has been a sell-off in Dow Jones and S&P 500 whenever the Trump administration has raised the heat in the trade war.

Conversely, markets have moved to higher levels whenever there has been optimism over the US-China trade deal. Looking at the current scenario, despite some statements that suggest otherwise, there is a general sense of optimism over a possible phase one of the US-China trade deal.

Would Trump’s impeachment trigger a stock market crash?

Incidentally, while Trump’s trade war has led to uncertainty, the administration’s policies are otherwise business-friendly. Apparently, some observers like hedge fund manager Paul Tudor Jones see a market crash if Elizabeth Warren becomes the next president. While stock markets have lived with Trump’s trade policies, Warren’s views on taxation have spooked some fund managers. It wouldn’t be prudent to predict how the Dow Jones and S&P 500 might react to Trump’s impeachment. However, Trump’s belief that it would lead to a “depression” looks very far-fetched.

Meanwhile, a survey of investors showed that the majority of them fear a stock market crash next year. Read Market Crash Imminent, Say Super Rich: Time to Panic? for more analysis.


More From Market Realist