Former President Donald Trump has taken to social media to blame President Joe Biden and Vice President Kamala Harris for the dramatic drop in the stock market, attributing the decline to their leadership amidst rising fears of a U.S. recession. Trump’s comments were posted early Monday morning on Truth Social, where he stated, “STOCK MARKETS ARE CRASHING, JOBS NUMBERS ARE TERRIBLE, WE ARE HEADING TO WORLD WAR III, AND WE HAVE TWO OF THE MOST INCOMPETENT ‘LEADERS’ IN HISTORY. THIS IS NOT GOOD!!!”
Trump’s remarks come as the Dow Jones Industrial Average plummeted 1,182.93 points, or 2.98%, shortly after the opening bell, following a 611-point drop on Friday. The S&P 500 and Nasdaq also saw significant declines, with the S&P down 3.53% and the Nasdaq dropping 4.8%. These figures represent a severe hit to the markets, which had previously been on a steady rise.
The sharp decline in the stock market is not isolated to the United States. Global markets are also feeling the impact, with Japan’s Nikkei 225 experiencing a 12% drop, its worst one-day fall since 1987. European markets followed suit, with widespread sell-offs driven by fears of a slowing U.S. economy. This global reaction underscores the interconnected nature of today’s financial markets and the broad concern over economic stability.
Investors are reacting to several worrying economic indicators. Last week’s jobs report revealed a surprising rise in the U.S. unemployment rate, coupled with slowed hiring. This news has compounded concerns that the economy is cooling amidst high prices and elevated interest rates. Manufacturing activity is shrinking, and dismal forecasts from major U.S. technology firms have further shaken confidence. A weak jobs report and shrinking manufacturing activity in the world’s largest economy have pushed the Nasdaq 100 and Nasdaq Composite into a correction last week.
The current market turmoil can be attributed to a growing lack of confidence in economic leadership and the anticipation of a recession. Trump emphasized this point by sharing comments from Cantor Fitzgerald’s CEO, Howard Lutnick, who said, “‘Japan down 12%, India down 6%. Germany way down also. U.S. really bad. This is a preview of the world markets without Donald J. Trump in the White House. None of this happens if Trump is in. Kamala and the markets don’t go together. She’ll destroy the markets. She’s in power now and look at what is happening. One week of the fake media saying better polls and you get a market crash.'”
Investors seeking safer assets have caused bond yields to slide, with the 10-year U.S. Treasury note dropping to 3.7379%. The CBOE Volatility Index, Wall Street’s “fear gauge,” spiked to its highest level since the early days of the COVID-19 pandemic, reflecting heightened investor anxiety.
Tech giants, which have been significant drivers of market growth in recent years, are among the hardest hit. Apple fell 8.4% after Berkshire Hathaway slashed its stake in the company. Nvidia dropped 9.7% following reports of delays in its upcoming AI chips, while Microsoft and Alphabet also saw substantial losses. Financial firms are not immune to the downturn. Bank of America led the declines among big U.S. lenders, falling 4.5%. Crypto-linked stocks also suffered, with Bitcoin hitting its lowest price in five months, dragging Coinbase Global, MicroStrategy, and Riot Platforms down with it.
Trump’s posts are not only a critique of current economic policies but also an attempt to contrast his administration’s performance with the present. By citing Lutnick’s comments, Trump is reinforcing his narrative that the current administration is ill-equipped to handle economic challenges. “STOCK MARKETS CRASHING. I TOLD YOU SO!!! KAMALA DOESN’T HAVE A CLUE. BIDEN IS SOUND ASLEEP. ALL CAUSED BY INEPT U.S. LEADERSHIP!” Trump posted Sunday night.
Market analysts are closely watching for any signals from the Federal Reserve regarding interest rate cuts, which could help stabilize the markets. Traders now see a 98.5% probability that the U.S. central bank will cut benchmark rates by 50 basis points in September, compared to an 11% chance seen last week, according to CME’s FedWatch Tool. “I am reluctant to believe the Fed would start the easing process with a 50 bps cut, but if the next seven weeks of data are consistent with this week’s, the Fed should be aggressive,” said Ronald Temple, chief market strategist at Lazard.
The economic landscape remains fraught with uncertainty, and the response from both the government and financial institutions will be critical in navigating these turbulent times. As the situation develops, the interplay between political leadership and economic policy will continue to be a focal point for both investors and the general public. With several Fed officials scheduled to speak this week, any indication of policy easing might soothe investors’ nerves and help mitigate some of the current market instability.