President Trump’s first thought Friday morning — on Twitter, anyway — was to blame Wall Street’s slide the day before on a new Democratic majority in the House of Representatives.
If he was correct — and a slew of market analysts had instead blamed a lower sales forecast from Apple that was linked to Trump’s own trade policies — investors forgot about it in the heady aftermath of a jobs report that showed U.S. payrolls growing almost twice as fast as expected and reassurance from the Federal Reserve about interest rates.
The blue-chip Dow Jones Industrial Average rose 3.3 percent to 23,433, the broader S&P 500 surged 3.4 percent and the tech-heavy Nasdaq climbed 4.3 percent, thrusting all three indexes into positive territory for 2019, a salve to a president whose willingness to take credit for market gains has left him vulnerable to barbs when traders turn fickle.
As I have stated many times, if the Democrats take over the House or Senate, there will be disruption to the Financial Markets. We won the Senate, they won the House. Things will settle down. They only want to impeach me because they know they can’t win in 2020, too much success!
— Donald J. Trump (@realDonaldTrump) January 4, 2019
American payrolls widened by 312,000 in December, the Labor Department said before the start of regular New York trading on Friday, while wage growth topped 3 percent, signaling that a job market that has been tightening since 2009 is finally starting to buoy paychecks. That’s crucial to the U.S. economy, which draws more than two-thirds of its size from consumer spending.
Employment and hiring “remained quite solid as we wrapped up 2018,” Mark Hamrick, senior economic analyst for Bankrate.com, told the Washington Examiner.
Federal Reserve Chairman Jerome Powell, meanwhile, soothed investors worried that the central bank’s interest-rate hikes will start to undermine growth. Strong economic momentum from 2018 will probably carry into 2019, he said in a panel discussion Friday morning, and the Fed will “be patient” as it monitors progress.
“We will be prepared to adjust policy quickly and flexibly,” he added, noting that the Fed paused planned rate hikes in 2016 due to a weaker than expected economy at the time.
Trump, who appointed Powell to succeed Janet Yellen, has criticized the Fed for raising benchmark interest rates too quickly; after four hikes in 2018, the president reportedly asked staff whether he had the authority to fire the Fed chair. Laws designed to ensure the central bank’s independence from politics, however, allow the chairman to be fired only for cause and Powell said Friday he wouldn’t resign if asked to do so.
The president’s Friday morning Twitter barb against Democrats appeared to attribute the Dow’s 660-point slide Thursday to concerns that the party’s majority in the House of Representatives would attempt to impeach him; one freshman had promised as much.
Speaker Nancy Pelosi and party leadership, however, have cautioned against rash action and said they want to review a final report from special counsel Robert Mueller, who has been investigating whether Trump’s campaign worked with Russia to defeat rival Hillary Clinton in 2016.
The Dow Jones has climbed 24 percent during Trump’s tenure in the White House, reaching a record high near 27,000, while the S&P 500 has added 14 percent.
