Stocks jolt on Trump news, then recover

U.S. markets reacted with a jolt Friday after President Donald Trump announced that he and the first lady had tested positive for the coronavirus, but investors’ shock was quickly eclipsed by optimismaboutmore stimulus.

The three major U.S. indexes slumped more than 1.5 percent after Trump tweeted the diagnosis, but then cut their losses after

House Speaker Nancy Pelosi (D-Calif.) said shewas anticipating a bipartisan economic relief deal, suggesting that Trump’s infection could hasten an agreement.

The potential for more stimulus was enough to take investors’ minds off the election.

Meanwhile, the last monthly jobs report issued before the Nov. 3 election signaled that the economic recovery could be cooling off. The U.S. added just 661,000 jobs in September — the smallest monthly jobs gain since the recovery began in May. This brings the unemployment rate to around 7.9 percent, which is more in line with other recent recessions.

Trump was diagnosed hours after it was disclosed thatHope Hicks, a top aide, had tested positive Thursday. Dow futures sank more than 500 points shortly after the announcement, and the VIX volatility index soared 9 percent.

The news initially rattled overseas markets. Japan’s Nikkei closed down0.7 percent but European indexes recovered and nearly broke even. Chinese and South Korean markets are closed for public holidays.

Stocks in Britain were hammered earlier this year as Prime Minister Boris Johnson battled COVID-19 and spent time in an intensive care unit.

“Initial market reactions to the news that President Trump tested positive for

COVID-19 are as expected— negative. However, markets could have some unexpected reactions as this could break the log jam in current stimulus negotiations,” Jamie Cox, managing partner for Harris Financial Group, wrote in commentary Friday.

Oil markets were also shaken by the news. Brent crude, the international oil benchmark, slumped more than 3.4 percent to trade at $39.51 a barrel. West Texas Intermediate

Crude, the U.S. oil benchmark, sank more than 3.6 percent to trade at $37.38 a barrel.

“It seems reasonable to assume that markets will be on shaky ground throughout October with the perfect storm of a highly contentious election and a pandemic that remains stubbornly at the forefront,” Peter Essele, head of portfolio management for Commonwealth Financial Network, wrote in commentary Friday.