Trump Warns of Stock Market Crash, Stocks Fall This Week

• During his visit to India, President Trump warned about a stock market crash if he isn’t reelected. He has made similar comments in the past as well.
• While US stock markets may or may not crash after the presidential election results, they have fallen this week. The Dow Jones Index has shed almost 1,900 points this week. The futures are pointing to a weak opening today as well.

Trump warns of a stock market crash

During his India visit, President Trump warned that the stock markets could “crash like nobody has seen before.” However, this isn’t the first time that he has made such comments. On multiple occasions, President Trump has claimed that US stock markets would crash if he isn’t reelected. He also said that markets would crash if he got impeached. Notably, several market participants were calling for a stock market crash last year. In contrast, markets rose to record highs. The Dow Jones Industrial Average Index (NYSEARCA:DIA) and the S&P 500 (NYSEARCA:SPY) rose 22.3% and 29% last year.

Dow Jones sheds 1,900 points

The Dow Jones Index has fallen by more than 3.0% for two consecutive days. In absolute terms, the Dow Jones Index has shed 1,910 points this week. The index has closed in the red for four consecutive trading days. The index has fallen 7.7% cumulatively during this period. A fall of 10% is termed as a “correction.” Before the current sell-off, US stock markets held their ground even though valuations are near multiyear highs. Other assets aren’t cheap either. The 10-year Treasury note yield fell to its all-time low, while gold prices are trading near multiyear highs.

Dow Jones futures point to a weak opening

The Dow Jones and the S&P 500 futures are pointing to a weak opening today as well. Major Asian stock markets closed in the red today, while European markets were in the red in early trade. Looking at global indicators, US stock markets might also trade on a weak note today. However, the Dow Jones futures should be taken with a pinch of salt. Futures pointed to a strong opening yesterday but US stock markets fell sharply.

Could the coronavirus trigger a stock market crash?

US stock markets didn’t crash last year even though recession pundits predicted a crash several times. However, more cases of the coronavirus outside China could have a negative impact on global growth. Falling global growth is a bearish driver for stock markets, especially when valuation isn’t cheap. While markets may or may not crash after the US presidential election results, there could be a sell-off if the coronavirus continues to spread. Read Did the Dow Jones Catch the Coronavirus? to learn more.

First published here: Trump Warns of Stock Market Crash, Stocks Fall This Week