It might not have been the best idea for the Trump administration to tout the stock market so much.
The president and his aides have made a habit of pointing to the stock market as a measure of their White House success. Trump took to Twitter to celebrate the Dow Jones Industrial Average hitting 20,000 five days after his inauguration and has publicly flaunted the stock market rally since his election on several occasions. But now, the tides are starting to turn, and a Wall Street focus appears increasingly unwise.
Stocks opened lower on Wednesday, continuing to decline after posting their worstlosses of the year the day prior. The S&P 500, which had not declined by 1% in 109 sessions, dipped 1.2% on Tuesday. The Russell 2000, which tracks small-cap stocks, plunged 2.5%, wiping out all of its 2017 gains.
If we called it the Trump rally, will we soon be looking at a Trump slump?
Press Secretary Sean Spicer downplayed the correlation between the administration and the markets in a press briefing on Tuesday when asked by a reporter whether Trump believes the day's dip in the Dow is a result of his performance as president.
"Well, I think to look at any one day is--is nothing that we've ever--we've always cautioned," he said. "You can't look at one indices and say that that is the benchmark of an entire economy."
He may have forgotten Trump's Jan. 25 tweet celebrating the Dow's 20,000 mark and his other references it since.
At his Feb. 16 grievance-filled press conference, the president took time out to tout stocks. "The stock market has hit record numbers, as you know," he said.
The president isn't the only one with a penchant for tying the White House to Wall Street. In an interview with Fox News' Sean Hannity on Monday, top Trump aide Kellyanne Conway said the "positive optimistic message" Trump delivered at a rally in Louisville, Ky., earlier that evening "really matches the markets, the stock market."
But the markets appear to be souring on Trump, due at least in part to increasing concern that the promise of deregulation, infrastructure spending and, above all, tax cuts driving investor optimism are much less of a guarantee than once thought.
Hill Republicans are bent on tackling healthcare reform first and foremost, and doing so is proving easier said than done. (The president marveled in February that "nobody knew healthcare could be so complicated.") House Speaker Paul Ryan has set a vote on the American Health Care Act, the GOP's proposal to repeal and replace the Affordable Care Act, for Thursday, and the outlook isn't good.
Not only does a focus on healthcare delay Trump's pledged tax reform (he campaigned on a promise to reduce corporate taxes to 15%, the House GOP says 20%), but it also sucks away valuable political capital necessary to tackle other items on the agenda.
Also dragging tax reform progress is the ongoing drama over Russia. FBI Director James Comey confirmed in testimony on Monday before the House Intelligence Committee that his agency is investigating the Russian government's efforts to interfere in the 2016 presidential election and potential links between Russia and the Trump campaign.
"If you look at the chronology of this, right after the election there was a discussion about this was going to be a 2017 tax cut," said Goldman Sachs economist Alec Phillips in a recent podcast reported by Business Insider. "Now it's clearly a 2018 tax cut. Who knows? It could be a 2018-19 story ultimately."
He told clients to tamp down their enthusiasm.
To be sure, many of the things that influence stock market performance are out of Trump's hands -- for example, the Federal Reserve last week raised interest rates and is on track to do so twice more this year, which could stifle market growth and the economy. Dragging oil prices could spur caution among investors, as could geopolitical developments. A Deutsche Bank note on Wednesday cited reports that North Korea is to pursue an "acceleration" of its nuclear and missile programs as a factor "adding to the string of risk-off news and helping to push the selloff."
The S&P 500 has posted gains during the first 100 days of every president since John F. Kennedy, with the exception of Jimmy Carter and George W. Bush.
The index is still up more than 3% since Trump was inaugurated on Jan. 20, meaning he might still keep talking about it--the question is if he wants to.
Action Alerts PLUS, which Cramer manages as a charitable trust, has no positions in the stocks mentioned.