The Dow Industrials, S&P 500 and the Nasdaq were all in negative territory during the first hour or so of trading on 10/2/19 as the markets started to absorb President Trump’s potential impeachment. The VIX or Volatility Index was higher in the first hour but fell throughout the rest of the session. Gold had a fairly similar pattern as the VIX as it rose a bit in early trading but fell sharply over two hours.
However, it appears (not surprisingly) that the stock markets are more interested in a China trade deal than Trump’s political problems, with the Dow and S&P 500 both up 0.6% and the Nasdaq up 1% on Wednesday. Even the release of a potentially damaging transcript between Trump and the President of Ukraine (or major portions of it) did not derail the markets.
Still, one day does not make a trend. Depending on what additional information comes to light (there are reports Wednesday night that the whistleblower report could be made public as early as Thursday, or at least major portions of it) the impeachment process could take a life of its own with unknown impacts to Trump and the markets.Today In: Money
Another vaporware Chinese trade comment from Trump?
Probably the biggest reason that the markets turned higher was a brief comment from Trump in the morning about striking a deal with China. Per a report from Reuters Trump said that a deal “could happen sooner than people think, the Chinese were making big agricultural purchases including beef and pork and they want a deal very badly.”
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However, it was just the day before in his speech at the UN General Assembly that Trump blasted the Chinese. He said, “Not only has China declined to adopt promised reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping, forced technology transfers and the theft of intellectual property and also trade secrets on a grand scale.” These types of statements don’t make it any easier for the two sides to come to a comprehensive agreement.
The volatility index fell over 6%
The VIX or Volatility Index fell from 17.05 to 15.96, 1.09 points or 6.4%, on Wednesday. If the markets were concerned about Trump being impeached or it impacting the economy, the VIX should have moved higher. It had risen over the past week but with the release of the phone call transcript between Trump and the President of Ukraine it would have not been surprising if it had moved higher.
Gold fell over 1%
Gold is rushed into when there is a lot of uncertainty and the impeachment of Trump creates a lot of uncertainty. However, gold fell $22 or 1.4% to $1,511 on Wednesday. Gold has risen sharply over the past four months, so Wednesday’s move may have just been some profit taking.