On July 31, the Finance Associated Press reported that as the US presidential election approaches, the words and actions of Republican candidate Trump are once again attracting attention from the market.

Although Trump has long regarded the trend of the United States as a barometer of his governance achievements, and during his tenure, the U.S. stock market has indeed reached a historic high. However, it is undeniable that if we carefully review history, we will find that most of the direct impact that Trump has had on the U.S. stock market in the past is actually negative...

What worries Wall Street is that if Trump wins the U.S. election again this year, this wave of "Trump storms" in the U.S. stock market may come back.

"Trump storm" cannot be ignored

Although Trump himself may be very pleased to see the U.S. stock market rise, as perhaps the most "unfiltered" president in US history, Trump's past remarks often exacerbate market chaos, even causing sell-offs—especially in the companies or industries involved in his political goals.

There are countless examples of this.

In the same interview, Trump also attacked large US technology companies, exacerbating the sell-off of US technology stocks. The Nasdaq 100 index dropped nearly 10% in a few days, evaporating more than $1.7 trillion in wealth.

In addition, Trump's attack on green/renewable/clean energy companies also triggered the sell-off of stocks in these specific industries. Market commentators jokingly referred to it as the "Trump storm hitting wind and solar stocks".

Looking back at Trump's previous term, there were also many similar cases. For example, he would suddenly make some random remarks on social media, or suddenly make a policy stance shift that surprised the market, causing the unfortunate "hurt stocks" to plunge.

For example, in June 2018, Trump suddenly threatened to impose tariffs on Harley-Davidson, in order to punish the manufacturer of motorcycles for moving production overseas. After this statement, the company's stock price fell nearly 10% in two days.

Another time, Trump suddenly tweeted accusing Delta Air Lines of being unfavorable in responding to his travel ban and should be responsible for the long airport delays caused by this. After this statement, the company's stock price also fell nearly 10% in two days.

In addition, according to U.S. media evaluations, Trump also seems to often use his executive power as a weapon to attack those he dislikes.

For example, when Trump was angry about CNN's report about him, he seemed to take retaliatory measures, delaying the merger of CNN's parent company Time Warner with AT&T for two years, causing serious damage to both companies.

The scope of attack covers the entire market

Sometimes, the target of the "Trump storm" is not just a single company or industry, but the entire market.

For example, after Trump suddenly tweeted in 2019 that he would impose tariffs on Chinese imports, the S&P 500 index fell a cumulative 4% that day and the next day. In another instance, Trump inexplicably verbally attacked the US Federal Reserve Chairman Powell, causing the US stock market to lose $500 billion in market capitalization the next day.

A study by Barron's even found that when key words such as "tariffs", "Powell", or "Fed" appear in Trump's tweets, the stock market tends to fall. Obviously, the market does not welcome Trump's protectionist stance or attempts to undermine the independence of the Federal Reserve.

Another statistical study by Bank of America Merrill Lynch showed that during Trump's first term, the days when Trump tweeted a lot (with more than 35 tweets per day) were significantly correlated with negative returns in the US stock market.

Trump's policy stance is "changeable", and his style of language seems to be too "random and elusive". This kind of style is obviously not favored by Wall Street. After all, the market usually hates unpredictability, and Trump himself is almost the spokesperson for the word "unpredictable".

Compared to that, the only few "small sector" of US stocks that really benefit from Trump's prospects are private prisons and gun manufacturers, etc. These industries have been subject to strict regulations during the Biden administration, while Trump tended to relax regulations on these industries.

US stock giants may be the next victims.

Looking ahead, based on Trump's current policy commitments, his second term may be more dangerous for the stock market than his first term. And the US stock giants, which have had a smooth rise in stock prices over the past two years, may be the number one target of this "Trump storm".

Firstly, he has promised to impose a 10% tariff on all imported commodities, and has chosen JD Vance as his campaign partner - Vance has always been known for his support of anti-monopoly and anti-corporate speech, claiming to come from the bottom of the American society.

At a recent rally, Trump also began to attack the recently record-breaking US stock market, claiming that it only made "the rich richer", which also reflects a tough economic populism. In other words, although Trump chose a pro-business "relaxation of regulations" stance in his first term, he may not choose this stance again in his second term.

Most importantly, the relationship between Trump and many CEOs of large US companies may have deteriorated drastically. According to the New York Times, "when someone pointed out to him that no CEO from the Fortune 100 had publicly donated to Trump's campaign, he was furious."

Given Trump's tendency towards personal grudges, this is an ominous sign.

Wall Street worries that if Trump wins this year's election, he may be more effective and ruthless in implementing his "revenge", and the shareholders of those giant companies will suffer losses for this. As the US Business Week pointed out, Trump believes he now has a deeper understanding of the power lever and says, "Now, I know everyone. Now, I am really experienced."

Editor/Emily