Analysis has emerged suggesting that President Donald Trump's words and social media activity have become the leading source of uncertainty in the U.S. capital markets. On the 25th, Bloomberg quoted a report from Fundstrat Research, revealing an intriguing fact: after Trump's official inauguration, the top five days of gain or loss in the S&P 500 were all directly linked to the President's words or posts. This is an unprecedented phenomenon since the Reagan administration in the 1980s, demonstrating how powerfully a single individual's will can dictate economic trends.
The market's response takes an immediate form with almost no lag between words and actions. Looking at specific examples, on April 9 last year, when an announcement was made to suspend tariffs, the S&P 500 surged by 9.5% in a single move; a month later, on May 12, it rose by 3.3% following the achievement of a U.S.-China trade truce. Conversely, on April 3, when comprehensive tariff measures were announced, the index plummeted by 4.8%, and the next day, after China took retaliatory measures, it fell an additional 6%. A similar pattern has repeated in recent Middle East tensions: on March 20, the index dropped 1.5% after a statement opposing the end of the war, but on the 31st, upon news of progress in negotiations, it surged 2.9%, achieving a V-shaped recovery in a short period. The fact that it recovered 9% of its decline from the previous high in just 11 trading days and hit a new all-time high demonstrates how sensitively market psychology reacts to extreme factors.
The ripple effects of this phenomenon have spread beyond the stock market to the entire financial ecosystem. Uncertainty has intensified, with increased volatility in raw material prices and oil prices returning to early COVID-19 levels. Wall Street has expressed concern, pointing out that the President's personal influence has become excessively large. While economic indicators, interest rates, and corporate earnings were once the core variables determining market direction, the President's own statements have now become the most important signal. Fundstrat described this situation bluntly as "the President holding the leash of the market," warning that market autonomy could be compromised.
However, experts argue that this phenomenon cannot be explained solely by an expansion of the President's influence. They note that the volatility index shows little difference compared to the past, meaning the market's basic instability remains unchanged, and they also point out that the increased sensitivity to news due to the growing share of passive investments cannot be ignored. In other words, it is interpreted that extreme volatility like today's is occurring due to the complex interplay of political factors and changes in market structure. There is a high possibility that the President's policy stance and statements will continue to act as the main drivers of market gains and losses, making urgent preparation necessary.