President Trump’s Tweets Causing Volatility in Stock Prices

Attention! Did you know that President Trump’s tweets can influence stock and bond prices? According to Bank of America Merrill Lynch, “on the days when Trump tweets a lot are associated with negative stock market returns.”

As the financial world is becoming more and more data-driven, financial analysts have developed algorithms that predict the volatility of stock prices as a result of President Trump’s tweets. 

This industry keeps expanding as Trump’s tweets create stronger impacts on the stock market. Some startups, such as Social Market Analytics, a Chicago company run by Joe Gits, are aimed solely at analyzing how tweets affect stocks and passing that data along to traders. Many analysts believe that Trump’s Twitter posts impact the stock prices by influencing consumer investors’ expectations for the market trend. President Trumps’ tweets are often associated with a drop in stock prices. 

In particular, his tweets on the US-China Trade War have a significant effect on stock prices. Here is one such example from Forbes :

“In the course of 2 minutes on Friday President Trump unleashed six tweets about Fed Chairman Powell’s speech at the central bank’s Jackson Hole annual economic policy symposium and China announcing that it would impose a 5% to 10% tariffs on $75 billion of U.S. exports to China. The stock market reacted immediately and intensely negatively to Trump’s first set of tweets sending the Dow Jones 30 Industrials down about 400 points in 15 minutes and 500 points within an hour.”

It is clear that the Dow Jones index dropping “500 points within an hour” is a drastic change for the stock prices and big hit on consumer and investor confidence. 

Moreover, Trump’s tweets also have the power of making a large corporation’s stock prices plummet. Investors can make money by buying and selling stocks according to their predictions - this is known as insider trading. There is no proof that President Trump’s family is involved in insider trading. However, if the content of Trump’s tweets was leaked before it was posted publicly, it could lead to insider trading and financial manipulation, both of which are illegal. 

Clearly, President Trump has a significant influence on the country’s financial markets. Next time when you read his tweets, make your investment decisions accordingly!

Edited by:
David Cassaza, Matthew Takavarasha