USA TODAY US Edition

Wall Street’s cheers have turned to jeers

‘Tariff tantrum,’ Trump get a share of the blame

- Adam Shell

The “Trump rally” has morphed into a presidenti­al plunge.

The total paper gain of U.S. stocks since Election Day has been sliced from $8.7 trillion at the market’s alltime high Jan. 26 to $5.7 trillion after Tuesday’s rebound on Wall Street, according to Wilshire Associates. In a span of nine weeks, investors have lost $3 trillion in market wealth, and about a third of the gains since President Trump was elected has been erased.

A sizable chunk of that decline has come since early March, when the president announced 25% tariffs on steel imports into the U.S., threatened China with up to $60 billion in tariffs and took to Twitter to blast Amazon.

The shift in the market’s mood has been swift, and many Wall Street pros single Trump out for some of the blame. When stocks were hitting record highs in January, the president’s

market-friendly, profit-boosting tax cuts and push to slash business red tape were lauded.

But there was one nagging worry — and a big potential risk — to the bullish story line: Investors warned that the market wouldn’t like it if the president followed through on campaign promises and tactics they viewed as threats to the economy and company profits, such as his tough tariff talk, penchant for protection­ism and willingnes­s to pick fights on Twitter with CEOs of America’s most successful companies.

That time seems to have arrived. And so has the market backlash.

“It’s the Donald Trump sell-off,” says David Kotok, chief investment officer of money management firm Cumberland Advisors. A “bullying and belligeren­t president is undoing all the benefits of tax cuts, repatriati­on and fiscal stimulus.”

Once-skyrocketi­ng stock prices have gone into a steep spring swoon that has left the Dow Jones industrial average and S&P 500 stock index in the red for the year. The Dow is 9.7% off its record high in January, and the S&P 500 is 9% below its peak.

“Investors are starting to learn the hard way that President Trump’s tweets and policies have a downside as well as an upside,” says Chris Rupkey, chief financial economist at MUFG, a global financial group. “If you are looking for a reason for the stock market correction, look no further than the Trump tweets that attack the business model of highflying market leaders like Amazon and also raises the specter of a trade war with America’s trading partners.”

As feared, the president has followed through on threats to impose tariffs on countries such as China that he says treat the U.S. unfairly. He has unleashed a war of words with a torrent of tweets against Amazon, the online retail behemoth he says gets favorable tax treatment and puts mom-and-pop retailers out of business.

A report from Bloomberg late in Tuesday’s trading session that suggested the White House is not actively looking to take action against Amazon was widely credited for the Dow’s nearly 390-point gain. Joe Quinlan, chief market strategist at U. S. Trust, says the rally suggests “investors are betting that the White House — despite its tough talk — will not initiate policies that lead to a trade war or aggressive regulation of the tech sector.”

A market that had been in ebullient spirits as analysts boosted their profit outlooks for corporate America has given way to a growing pessimism amid fears that “bad Trump” policies will undo a lot of the market positives from his tax cuts and deregulati­on.

To be sure, the president’s policies aren’t all to blame for the market’s woes.

Stock prices, according to some market watchers, had been rising at an unsustaina­ble pace. The Dow gained 25% last year and marched higher at the start of 2018. Many market pros had been warning of a correction.

Nor can the Trump administra­tion be blamed for the data privacy scandal that has engulfed Facebook and has Wall Street worried that social media companies’ profit streams could be hurt by regulation and potential changes to the way they sell user data to third parties.

A sell-off in shares of Tesla — the

“Investors are starting to learn the hard way that President Trump’s tweets and policies have a downside as well as an upside.” Chris Rupkey Chief financial economist, global financial group MUFG

maker of electric cars and driverless technology that has come under fire after a deadly crash involving one of its vehicles’ autonomous driving software — isn’t on Trump, either.

“It’s been a combinatio­n of things weighing on the market,” says Erik Davidson, chief investment officer at Wells Fargo Private Bank in Chicago.

Still, Trump’s protection­ist push does not sit well with Wall Street, which values free trade and views tariffs as a recipe for slower growth. Investors have been bracing for retaliatio­n from the countries Trump has hit with tariffs. China struck back Monday when it announced it was raising import duties on a $3 billion list of U.S. products including pork and apples, a move investors viewed as an escalation of trade tensions between the world’s two largest economies.

Doug Ramsey, chief investment officer of The Leuthold Group, said Monday’s sell-off was what he refers to as a “tariff tantrum.” Free trade, he says, has been a pillar behind the growth the world has seen since the early 1990s.

A big problem confrontin­g markets now is there’s a lot of confusion.

Gary Kaltbaum, president of Kaltbaum Capital Management, sums up the downside of Trump’s style on markets in one word: “Uncertaint­y.”

 ?? AFP/GETTY IMAGES ?? In weeks, investors have lost about one-third of the gains since President Trump was elected.
AFP/GETTY IMAGES In weeks, investors have lost about one-third of the gains since President Trump was elected.
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