A 500 billion overnight evaporation, is Wall Street dominated by "Trump tweets" memories coming back?

Is Trump going to influence the US stock market again with his personal influence?

This Wednesday, after Trump made comments, European and American chip stocks plummeted.

First, the European stock price of ASML, a giant in lithography machines, fell by 10%, then Nvidia in the US fell by 6%, and AMD fell by 10%. The collapse of chip stocks also dragged the Nasdaq index down by 2.7%, marking the largest single-day decline since December 2022. Only the stock prices of Intel and GlobalFoundries rose against the trend.

Trump's "control" over the US stock market is so domineering, and this is not the first time he has influenced the stock market through his remarks.

When Trump was president, he loved to use Twitter to influence the stock market

Trump is probably the US president who loves to use Twitter the most in history.

During Trump's presidency, he often used his public remarks to praise or criticize certain industries or companies, especially loving to use Twitter to make statements that trigger market fluctuations.

On February 19, 2020, when the US stock market hit a historic high and Trump's approval rating also rose, to commemorate his historic achievement, he posted a celebratory tweet.

"The stock market hits a new high again!"

After this tweet, the pandemic hit, followed by panic in the US stock market, causing a sharp drop and leaving Trump in an awkward position.

Generally, US presidents and politicians do not publicly express interest in individual companies because it can trigger severe market fluctuations.

For example, in 1962, concerned about rising inflation, then-US President John F. Kennedy publicly criticized the price increase plan of steel company executives and specifically mentioned US Steel Corporation at a press conference. This event subsequently triggered a threat of antitrust investigations into the steel industry, scared investors, and caused a significant stock market decline. Therefore, in the following decades, subsequent presidents like Reagan and Clinton avoided directly commenting on companies or the market.

But Trump didn't care. Almost from the moment he was elected president, he started his "Twitter governance" and used the performance of the US stock market as a barometer of his political achievements. Since taking office in 2017, he has sent out more than 200 tweets or retweets about the US stock market and made numerous statements highlighting the rise of the stock market during his tenure.

Interestingly, whenever the stock market falls, Trump always publicly blames the decline on his subjective political opponents, such as the Federal Reserve, the Democratic Party, and many news media. He openly threatened and criticized major US companies, including Amazon, the US Postal Service, General Motors, Ford, Lockheed Martin, and Boeing, among others Even when the stock market is falling, Trump would ask the Federal Reserve to cut interest rates to save the market. Dan Wood, a political science professor at Texas A&M University, said, "I don't think any president, in the future or in the past, will value the stock market as much as Trump did."

Trump's Tweets and Wall Street's Woes

Trump's tweets about the stock market often give headaches to Wall Street fund managers, bankers, analysts, investment advisors, and other professionals, as they need to pay close attention to Trump's tweets and deal with sudden market fluctuations.

Kristina Hooper, Chief Global Market Strategist at Invesco, said, "This administration under Trump requires much more attention to information than we have ever experienced before from a president."

Although Trump's Twitter bombardment often troubles Wall Street, overall, during Trump's four-year term, the U.S. stock market performed well. From Election Day in 2016 to November 3, 2020, the S&P 500 stock index rose by over 70%.

Jason Trennert, Chief Investment Strategist at Strategas Research Partners, pointed out that the key to the stock market's rise during this period was the significant tax cuts implemented during Trump's term, which to some extent offset the negative impact of Trump's laissez-faire policy-making and communication methods.

Now that Trump seems to have the upper hand in the election, will we see a repeat of the "governing by Twitter" scene from years past?