Report Links U.S. President's Actions to Major S&P 500 Swings

A report from Fundstrat Research has linked the U.S. president's public statements and policy decisions to the S&P 500's most extreme trading sessions since the start of the current term in January 2025. The analysis found that these actions were the primary drivers behind the index's five best and five worst days.

This influence marks a departure from patterns observed in administrations since 1981. Market volatility has been tied to the president's comments on social media, press briefings, and policy announcements. For instance, commodity prices, including oil, have shown heightened fluctuations comparable to levels during the Covid-19 pandemic's onset.

The report attributes this to shifting positions on international conflicts and trade policies.

The war in Iran has exemplified this dynamic, with the S&P 500 experiencing a 9% drop from a January 27 peak to March 30, followed by a rapid recovery to all-time highs over 11 trading days. On March 20, the index fell 1.5% after a White House briefing expressed opposition to a ceasefire.

In contrast, on March 31, it rose 2.9%—its best day since May—following statements to reporters indicating progress in negotiations and an approaching end to the conflict. Similar patterns emerged in trade-related events. The S&P 500 rallied 9.5% on April 9, 2025, after a pause in tariffs, and jumped 3.3% on May 12, 2025, following a 90-day trade truce with China.

Conversely, it plunged 6% on April 4, 2025, after retaliatory tariffs from China, and dropped 4.8% on April 3, 2025, upon implementation of new levies.

“He has the market in a chokehold. The president isn’t supposed to have such an extraordinary amount of control over the fortunes of the stock market. An investment strategist at Baird Private Wealth Management stated that traders expect interventions when conditions worsen, particularly if linked to administration actions. Veteran market strategist Ed Yardeni observed that daily White House commentary has an outsized effect on markets, unlike previous eras. However, some experts counter that the perceived turbulence may stem from increased communication frequency rather than inherent volatility. The average value of the Cboe Volatility Index (VIX) during the current term aligns with historical averages since 1990, at 19.3, matching levels under the previous administration. Algorithms in passive portfolios respond to headlines, potentially magnifying index movements by a factor of four to five compared to historical norms. White House social media channels have addressed market developments directly, posting graphics to highlight S&P 500 records or to calm investor concerns during downturns. The analysis suggests this direct engagement with equity prices as a performance metric is without precedent in available data. Critics argue that the correlation between presidential communications and market swings is anecdotal, driven by the volume of statements rather than their content. Nonetheless, the Fundstrat report underscores a unique concentration of influence on the S&P 500's extreme days. Market participants have adapted to this environment, with strategies now incorporating expectations of rapid policy shifts. The episodes of tariff escalations and de-escalations in 2025 mirror recent volatility tied to the Iran conflict, highlighting recurring patterns in administration-driven market events.”