Sean Rayford/Getty Images; Chelsea Jia Feng/BI
The market is in the midst of another "Trump Dump," a phenomenon where stocks see deep losses when the presidential hopeful targets them, according a group of researchers.
In an op-ed for Fortune, Jeffrey Sonnenfeld, Whitney Tilson, and Steven Tian — three researchers who examined Trump's effects on the US stock market — pointed to Trump's many "tantrums" over the years against specific companies and sectors, which later caused those areas to perform poorly.
The former president, for instance, just sparked a steep sell-off in the chip sector after he told Bloomberg that Taiwan took the US's chip business away, and should pay for US military protection.
Chip stocks almost immediately slumped, with Taiwan Semiconductor now down 17% from levels in mid-July. A broader sell-off also took place in tech, with the Nasdaq Composite dropping around 10% in the days following Trump's interview.
Trump has also regularly criticized renewable energy companies, which could be influencing those sectors to perform poorly as well, the researchers suggested. Clean energy firms are in the midst of a stock rout, with the iShares Global Clean Energy ETF down 10% from levels at the start of the year.
Trump's chaotic effect on stocks isn't new. He swayed markets in his first run as president, the researchers noted, such as when Harley-Davidson shares dropped over 10% after the former president said the motorcycle manufacturer would be "taxed like never before" in a post on X.
Delta Airlines also fell 10% within Trump's first month as president, after he implied the airline was to blame for "big problems" at the airport.
In general, the S&P 500 tended to sink on days when Trump posted something using the words "tariff," "Fed, " or "Powell," a 2019 Barron's analysis found.
"Former President Donald Trump has long regarded the stock market as a barometer for his success, constantly touting record highs during his time in office and still bragging constantly about the 'beautiful' stock market on his watch," the researchers wrote for Fortune.
They continued: "However, what many commentators miss is not just the 40 record highs the stock market has hit under the Biden-Harris administration—but also that while Trump does hold significant sway over pockets of the stock market, much of his impact is profoundly negative, particularly for individual companies and industries that draw his ire."
Backers of the 2024 presidential candidate argue for the existence of the "Trump trade," a general idea that Trump's victory in the upcoming election could spark gains for sectors like real estate, traditional energy, financials, and industrials.
But gains in those areas of the market appear mostly temporary mostly reversing themselves several weeks after the first presidential debate, the researchers noted.
"As bad as turbulence has been, a second Trump term promises to be even more perilous for the stock market," they added, pointing to the potential consequences of Trump's economic policies.
Other economists have criticized Trump's economic agenda. His policies, which include raising tariffs on Chinese imports, could be inflationary, raise unemployment, and slow economic growth, Nobel economist Joseph Stiglitz previously told Business Insider.
