White House tries to play down stock market fall

Trump himself did not comment on the market, even as share prices sold off dramatically, while he was touting the economy and last year's tax cuts in a speech in Ohio.

After US stocks plummeted on 5 February, the White House sought to play down concerns, saying President Donald Trump was focused on "exceptionally strong" underlying fundamentals in the economy.
 
But Trump himself did not comment on the market, even as share prices sold off dramatically, while he was touting the economy and last year's tax cuts in a speech in Ohio. That was a contrast to recent months when Trump has often talked about stocks, taking credit for the rally the market enjoyed during 2017 and the first few weeks of this year.
 
It was a sign that Trump may be absorbing a tough message, underscored by former White House advisers, that American presidents traditionally have avoided commenting directly on Wall Street's fickle trends.
 
Gene Sperling, a top economic adviser to Democratic former presidents Bill Clinton and Barack Obama, said Trump erred in recent months by focusing so heavily on the stock market. "Even though the stock market tripled under Bill Clinton, his view was that you should always focus your policies and your public messages on bread-and-butter kitchen table issues ... and that focusing on the stock market would take your eye off the real economy," Sperling said.
 
In his State of the Union address, Trump said, "The stock market has smashed one record after another, gaining $8 trillion and more in value in just this short period of time."
 
The benchmark Dow Jones industrial average soared 42 per cent between Election Day 2016, when Trump won the presidency, and its historic peak a week ago above 26,400. On Monday, the Dow fell to below 24,000 but regained some of its midday losses to close at 24,345. In the past five trading days, the index has erased all its gains since late November. The benchmark S&P 500 has pulled back more than 6 percent from a 26 January record high.
 
The "Trump rally," as some traders have dubbed it, has coincided with a sweeping tax code overhaul approved in December, which slashed corporate taxes, and a deregulation push. The S&P 500 rose 34 percent from Trump's election to its recent high.
 
But stock prices have been climbing since March 2009, when Obama inherited a serious financial crisis and the worst economic recession since the Great Depression of the 1930s from the previous Republican administration of George W. Bush. At that time, the Dow was trading at around 6,500.
Trump has also criticized his predecessor Obama's effect on markets. In November 2012, Trump tweeted, "The stock market and US dollar are both plunging. Welcome to @BarackObama's second term."
 
The S&P 500 rose 126 percent from Obama's 2008 election to his final day in office in 2017.
 
Source: Business Standard

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