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Trump’s Tweets Move Markets, But Not Always the Way He Wants

Is there a method to President Trump’s tweeting madness? Studies suggest there could be some strategy behind the social media screeds–and it isn’t all negative.

With 67.6 million followers, Trump has made Twitter his platform of choice and data indicates that his tweets–like them or hate them–dictate the heights and lows of the financial markets.

Trump’s tweets have had  a direct correlation with movement in the stock market and Treasury yields, according to a study released this month by Clever Real Estate. The president’s penchant for tweeting also affects the economy of trade war rival China, when he calls out the country, or other related key words, by name.

Since taking office, Trump has dashed off more than 13,000 Twitter missives, or about nine per day, using using his personal account, @realDonaldTrump. He wields the popular platform as a loudspeaker to sound off on the good and the bad in policy, the economy, China, the Federal Reserve and even who’s hired or fired on his staff.

Given his oft-stated mission to Make America Great Again, Trump’s tweets about the American economy trend “overwhelmingly positive,” with economists noting that framing the country’s economic engine as strong can help stave off decline, the study found.

Furthermore, 10-year Treasury yields drop when Trump tweets at the Federal Reserve, and those declines also correlated to dips in mortgage rates. In contrast, the Fed’s reactivity to those tweets also can cause turmoil, given the perception that Fed autonomy and authority is being questioned.

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What’s particularly interesting–and counterintuitive–is that Trump’s tweets about individual companies tend to correlate with a positive impact on their stock prices, even when his message is decidedly negative.

When Trump tweeted on Feb. 8, 2017, about how daughter Ivanka was “treated so unfairly” by the Nordstrom, the department store decided to stop carrying her line of apparel and footwear. Shares of Nordstrom initially fell about 1 percent following Trump’s opprobrious outburst, but then quickly recouped the loss by closing 4 percent higher at the end of the day’s trading session when compared with the prior day’s closing price.

The beginnings of that trend surfaced a month earlier on Jan. 3, when Trump bashed General Motors for sending a Mexican-made model of the Chevy Cruze to U.S. car dealers, tax-free, across the border. He closed his post with “Make in U.S.A. or pay big border tax!” Shares of GM had been trading down since before Christmas, but closed 0.9 percent higher on the day of the tweet, and then spiked another 5.5 percent the day after.

And despite Trump’s calls to manufacture in the U.S., just 15 percent of products offered in the Trump Organization’s online store were produced in one of the 50 states, Quartz reported last year.

The stock market tends to perform better when Trump is furiously firing off tweets. S&P 500 stock prices see an average rise of 19.5 points for every additional daily tweet. Trump’s quotidian twittering has steadily increased since he took office, and in October, he turned in an average of 19 times per day. On his most active day that month, Oct. 9, the leader of the free world found time to send 36 tweets and retweeted on 11 occasions.

And Trump’s tweets appear to have an impact on foreign markets. He wields the platform as a political weapon against China, according to the study, which tracked the HSBC manufacturing index as it’s considered an indicator of the overall health of the Chinese market. The index closed 3.4 percent lower on the 131 days Trump tweeted about the world’s factory, versus those days where he didn’t mention China, the study found.

“The reason for that drop in the HSBC index is likely due to Trump’s threats to increase tariffs on Chinese goods coming into America, which suggests people are making market predictions based on his tweets about monetary policy,” the study said.

Clever Real Estate isn’t the only firm that has monitored Trump’s tweeting patterns through his presidency. The “Volvfefe Index,” created by J.P. Morgan, tracks how his tweets impact the bond market. Volvfefe is a play on a 2017 middle-of-the-night Trump tweet when his missive supposedly about “constant negative press coverage” ended up reading “negative press covfefe.”

Most of the more than 10,000 tweets Trump has posted since inauguration have landed between noon and 2 p.m. But there’s also a greater chance that Trump will tweet out his thoughts at 3 a.m. versus 3 p.m. And there’s an interesting tendency for a lull in the tweeting between 5 a.m. to 10 a.m., leading some to snipe that this period could indicate a window earmarked for presidential repose.

A Goldman Sachs report analyzing Trump’s 140-character messages found that those addressing trade policy can spur huge reactionary swings. A recent Bank of America Merrill Lynch report suggests that stocks fall during days when Trump is vigorously typing away on Twitter, and rises on days where there’s little–almost nonexistent–tweeting activity.