Stocks surged on Tuesday after President Donald Trump tweeted about his plans to hold an “extended meeting” with Chinese President Xi Jinping later this month. The tweet came after U.S.-China trade talks stalled, and there were doubts over whether an additional 25% tariff on more than $300 billion in Chinese goods would go into effect soon.
Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.— Donald J. Trump (@realDonaldTrump) June 18, 2019
It was the latest case in which the stock market reacted to the president’s tweets. By appeasing investors or spooking them, the president’s tweets have sent stocks spiking or plummeting – and then back again within hours.
“I’m 50 years in this business… I don’t ever remember anything like this chaos in the messaging,” David Kotok, Cumberland Advisors chairman and chief investment officer, told Yahoo Finance’s On the Move. “What do I buy, and do I base it on a tweet?"
Financial markets have reacted negatively to signs of trade war going back to December 2018 when Trump tweeted that U.S.-China trade negotiations may not succeed. The Dow Jones Industrial Average fell by 799 points that day. For much of 2019, markets rose on expectations of a trade truce.
In early February, Trump tweeted that he would extend his March 1 deadline for an escalation in tariffs on Chinese imports. He cited “substantial progress” and “very productive talks.”
Then in May the president tweeted plans to apply more tariffs on Chinese goods, rattling markets, once again. His latest tweet on Tuesday led the Dow up 6.65% in June, at market close — the best start to the month since the June of 1940, when the index was up 6.92%.
Kotok thinks Twitter should stop playing a role in the market altogether. “I’m in the old school I think we should rip up the Twitter,” Kotok said.
Valentina Caval is a producer at Yahoo Finance.