James Comey moves markets more than Donald Trump.
Wall Street has been shaky in the lead-up to the former FBI director's highly-anticipated testimony on Capitol Hill on Thursday, and with good reason -- the biggest stock drops since Trump's inauguration have been tied to Comey.
The Nasdaq, Dow Jones Industrial Average and S&P 500 have all seen their biggest one-day drops since January 20 in the wake of news developments surrounding Comey. And the most sizable Comey slump has done more damage than the biggest Trump bump.
May 17, the day after the New York Times reported a memo from Comey revealing that Trump had asked him to scrap a federal investigation into then-national security adviser Michael Flynn, all three indexes saw their worst day of the year. The Nasdaq fell by 2.57%, the Dow declined by 1.78% and the S&P slipped by 1.82%.
March 21 was the indexes' second-worst day since the inauguration. On March 20, Comey confirmed in testimony before the House Intelligence Committee that the FBI was investigating whether members of the Trump campaign colluded with Russia to influence the 2016 election. During the same hearing, Comey also said he had no evidence to support Trump's unfounded allegations that former President Barack Obama had tapped his phones at Trump Tower.
All three indexes saw their best day of Trump's presidency on March 1, the day after he addressed a joint session of Congress in a pseudo State of the Union address. But none of the indexes climbed as much as they fell after the Comey memo.
Trump has bragged about adding more than $3 trillion to the stock market since his election, apparently using as a measure the Wilshire 5000, which tracks all of the stocks actively traded in the United States. Without Comey, that number would be even higher -- using the same measure, Comey wiped $500 billion off of stocks on March 21 and May 17 combined.
Comey, 56, will testify before the Senate Intelligence Committee on Thursday in one of the most-anticipated events on Capitol Hill in years. ABC, NBC and CBS will air the hearing, set to begin at 10:00 a.m. ET, live.
The White House on Monday said it would not seek to invoke executive privilege in order to block Comey's testimony "in order to facilitate a swift and thorough examination of the facts." Height Securities analysts in a note said that's a good sign. "A decision to assert executive privilege, aside from the legal questions, would have kicked up an even greater media firestorm and raised doubts even among the President's GOP defenders on Capitol Hill about whether in fact he had something to hide, in our view," they said.
But given the markets' reaction to Comey bombshells thus far, investors may have reason to worry -- at least temporarily.
"It seems as if investors are looking to take profits whenever the possibility of a Trump impeachment increases," said Sam Stovall, chief investment strategist at CFRA Research. "We may see a similar response in the days ahead."
All bets are off as to what Comey will and won't say on Thursday -- and how the markets will react, not only in the immediate aftermath but in the long term. Across the Nixon Watergate scandal, stocks fell by 40%. During the Clinton impeachment proceedings, they climbed.
"While a pullback could occur at any time, I don't think it would trigger a bear market," Stovall said. "Politics makes great headlines, but Wall Street worries about the bottom line."
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