Wednesday, President Trump appeared on the cusp of becoming only the 3rd US President to be impeached, history suggests investors need not worry, even though it adds uncertainty on Wall Street.
Strong partisan divisions were on display as members of the House of Representatives engaged in a debate ahead of historic votes on two charges against President Trump accusing him of abusing his power and obstructing Congress. Neither impeachable offences.
The Democratic-controlled House is expected to vote to impeach President Trump, though there are rumors that Speaker does not have the votes needed.
But the removal of President Trump, a Republican, from office appeared unlikely because it would require the Republican-controlled Senate to convict him in a trial by a 2/3rds majority.
With Wall Street focused this week on Washington’s limited trade deal with China and most investors expecting President Trump to stay in office, the S&P 500 hit an intra-day record high, extending its gain in Y 2019 to over 27%.
In Y 1974, Wall Street dropped and the dollar tumbled when President Richard Nixon was under threat of impeachment over the Watergate scandal. President Nixon resigned in August 1974, avoiding impeachment.
The market volatility in that frame came against a backdrop of President Nixon’s decision to suspend the USD’s convertibility into gold and a recession following the Crude Oil shock of late Y 1973.
In Y 1998, after early volatility, Wall Street weathered the impeachment of President Clinton, who was later acquitted by the Senate.
The S&P 500 fell 10% in the 11 trading days leading up to 8 October 1998, when articles of impeachment for President Clinton were sent to the House. But the benchmark index recouped those losses by 21 October and kept rising for the rest of Y 1998 to end the year up 27%
Wednesday, the US major stock market indexes finished at: DJIA -27.88 at 28239.19, NAS Comp +4.38 at 8827.75, S&P 500 -1.38 at 3191.14
Volume: Trade on the NYSE came in at 984-M/shares exchanged
- NAS Comp +33.0% YTD
- S&P 500 +27.3% YTD
- Russell 2000 +23.2% YTD
- DJIA +21.1% YTD
HeffX-LTN’s overall technical analysis of the major US stock market indexes is Bullish to Very Bullish in here.
Looking ahead, investors will receive the following reports Thursday: Existing Home Sales for November, the weekly Initial and Continuing Claims report, the Current Account Balance for Q-3, the Philadelphia Fed Index for December, and the Conference Board’s Leading Economic Index for November.