Column: Trump’s COVID diagnosis scares the stock market

Destiny Blanchard

The first week of October is complete and an insane amount of information has been thrown at us. With the impending election and continuing pandemic, it seems like every day we are thrown for a loop with new information.

At the beginning of the month no information was more globally shocking or talked about than the news of President Donald Trump testing positive for COVID-19 and being sent to Walter Reed Hospital for treatment.

It seems like everyone had a different reaction to this information but one area that saw a shift as a result of the news was the stock market. In the hours following the announcement of Trump’s diagnosis stocks fell over 1% overall.

The Dow Jones, S&P 500, and Nasdaq all fell between 1 and 2 percent last Friday in the early trading hours. A lot of stock market analysts say this happened due to a knee-jerk reaction from investors, who were likely uncertain about how this news would affect the markets.

In the hours and days following the dip in the markets, stocks seemed to regulate undoing any damage done.

It’s important to consider why Trump’s COVID-19 diagnosis has anything to do with the stock market, seeing as it has no direct effect on it. This type of news is something that investors have to pay attention to because they incorporate political risks into trading decisions.

As morbid as it sounds investors understand that if Trump were to die of COVID-19, chaos would likely follow. Drastic changes in the stock market have happened with presidents before including when JFK was assassinated and when Woodrow Wilson had the Spanish flu.

Investors were already hoping for an upturn in consumer spending if another stimulus package is approved, but this week has shown a stalling of that approval by Donald Trump. And as more and more people under Trump’s administration test positive for COVID-19, there’s more uncertainty among investors.

I think that what matters now is less about what happens with Trump and his administration’s recovery from COVID-19, but what happens after the election. Regardless of the outcome, come November this election will set the precedent for the stock markets for the upcoming year and the entirety of the next president’s term.

 

Destiny Blanchard is a junior management major. She can be reached at 581-2812 or [email protected]