9 April, 2018, 12:00 am
NEW YORK – “Don’t overreact,” President Donald Trump’s chief economic adviser told investors on Wednesday, when U.S. stocks were deep in the red over worries about the administration’s plan for $50 billion of import duties aimed at China.
Wall Street seemed to take heart from National Economic Council Director Larry Kudlow’s calming words in a Fox Business Network interview during his first week on the job, and the market turned itself around. The Dow Jones Industrial Average .DJI rallied more than 700 points from the day’s low.
That trust looked misguided a day later, when Trump — seemingly unbeknown to Mr Kudlow — said he had instructed an additional $100 billion of tariffs to be imposed on Chinese goods. Equities swooned again, with the Dow dropping roughly 600 points.
It wouldn’t be the first time that traders and investors got caught out by a seeming 180-degree turn on Trump policy, but Wall Street may have to get far more selective in terms of which statements, and from whom, they listen to.
“More typically, there’s a lot more cohesion in the messaging between the White House and the markets,” said Nicholas Colas, co-founder of DataTrek Research. “Certainly this administration is taking an entirely different tack. It’s been much more volatile in trying to understand what they’re trying to tell us.”
With rapid turn-about in the White House a regular occurrence, investors have made costly decisions based on the words of a rotating door of advisers and policy makers.