Market Thrives off Trump Win, Despite Apocalyptic Predictions
Dow Jones closed Friday with best single-week performance in five years
As it became increasingly clear late Tuesday night that Donald Trump would be the next U.S. president, stock market futures began to take a nosedive.
Progressive commentators could hardly hide their glee as the apocalyptic aftershocks they had predicted in the event of a Trump win seemed to manifest before their eyes. Both the Dow Jones and S&P 500 were down by well over 2 percent, and the murmur of millions of liberals simultaneously muttering “I told you so” grew.
But by the time the market closed on Wednesday, that murmur had been silenced by the laughter of Trump supporters and savvy buyers, as stocks had rebounded — the Dow was up by 1.4 percent and S&P 500 was up by over 1.1 percent. By the close of the market on Friday, the Dow Jones had surged by 5 percent — its best week since 2011.
If Trump’s success has left a trail of defied expectations and disproved predictions in its wake, few have been so glaringly wrong as the prophecies of the supposed financial ruin that was to follow a Trump triumph.
“In a note to clients late Thursday, [CitiBank] said the S&P 500 will fall by 3% to 5% immediately if Trump is elected,” CNN reported on Nov. 4. “The research firm Macroeconomic Advisers forecast in early October that a Trump win would result in an 8% drop in U.S. stocks … The Brookings Institute projects a 10% to 15% plunge in stocks if Trump wins,” it continued.
Brookings wasn’t alone in its forecast of short-term economic catastrophe. Writing for PBS, Eric Zitzewitz, an economics professor at Dartmouth, predicted a drop of 10 percent across global markets following a Trump win.
Simon Johnson, a former chief economist of the IMF and now a professor at MIT Sloan, was equally grim in his predictions. “While the precise consequences of bad policies are always hard to predict, if investors are wrong and Trump wins, we should expect a big markdown in expected future earnings for a wide range of stocks — and a likely crash in the broader market,” Johnson wrote in October.
Trump’s victory has not only proven that even the most respected political polls are unreliable, but also that supposedly expert financial forecasts can be equally as unreliable.
It is approximately 9:55 a.m. on Monday at the time of this writing, and the Dow is up .2 percent, while the S&P 500 is up nearly as much, according to Bloomberg.