Stocks opened lower on Friday after President Trump announced infected with the coronavirus, a diagnosis that brought the global health crisis to the Oval Office, threatening to strike the leadership of the largest economy in the world.
The S&P 500 fell 0.6 percent in late-morning trading, just hours after Mr. Trump tweeted late at night that he and First Lady Melania Trump had tested positive. The president was experience cold symptoms, according to two people familiar with his condition. Vice President Mike Pence and other officials have had negative results.
Mr. Trump’s announcement prompted investors to look for safe-haven assets such as the dollar and government bonds overnight, but as trading opened in New York they seemed to pick up the news gradually.
“Following an initial reaction, the news is likely to have a lasting impact on the market if it is considered to affect the outcome of the election or public health,” said Paul Donovan, chief economist at UBS Global Wealth Management.
Even with the silent reaction of the markets, the announcement only added to the deep uncertainty is already facing the economy: The pandemic has killed more than a million people worldwide and Mr. Trump has repeatedly indicated that the upcoming election is threatened with fraud and declined to say whether he would accept the result.
“A narrow and questionable outcome with a payback and volatility period would be bad news for the markets,” said Trevor Greetham, fund manager at Royal London Asset Management. “If anything, the president’s illness makes it more likely.”
Stocks have fluctuated in the past due to the health of the presidency. In September 1955, President Dwight D. Eisenhower suffered a heart attack, reducing the S&P 500 by 6.6% in one day. Shares fell 2.8 percent on November 22, 1963, the day President John F. Kennedy was assassinated in Dallas. When President Reagan was shot on the afternoon of March 30, 1981, the stock market shut down, reducing losses to just 0.3 percent.
Maybe the situation is more like Mr. Trump is that of British Prime Minister Boris Johnson, who was diagnosed with Covid-19 in late March and was briefly hospitalized in intensive care.
On March 27, the day Mr Johnson posted positive results, the UK stock market fell more than 5% – but stocks around the world have also suffered profound reductions. It was relatively early in the pandemic, and markets were volatile as countries locked in, imposed travel restrictions and tried to pass financial incentive packages.
In Brazil, stocks fell about 1 percent in July on the day it was announced that President Jair Bolsonaro, a right-wing populist who had often dismissed the severity of the pandemic, was positive.
Mr. Trump’s announcement – just over a month after Election Day, as most polls suggest – came as stocks lost steam after hitting new highs in early September, a remarkable recovery from the fall they experienced from the closing of March.
Stock markets are historically weak in the month leading up to the presidential election as investors reduce risk and expect more clarity about who will hold power in Washington. This year, however, the typical investor anxiety about a change in political winds is just one of the forces affecting the economy and financial markets.
The country is facing multiple crises stemming from the ongoing pandemic. The deep recession it has shown is showing signs of becoming more entrenched, with recent labor market reports showing a slow recovery. On Friday, the Labour Department reported that employers returned 661,000 jobs in September, almost 200,000 less than economists expected and well below the previous months. The economy created 1.5 million jobs in August and 4.8 million in June.
Oil prices fell on Friday as Brent crude, the international benchmark, fell nearly 4% to $ 39.37 a barrel. West Texas Intermediate, the U.S. standard, also fell about 4% to $ 37.18 a barrel. But the pressure on oil prices is only partly due to growing uncertainty about the US election and Mr Trump’s health, analysts said. Wider concerns about the global economy and oil demand are also contributing to the downturn.
And talks on another round of federal spending to support households and businesses have stalled in Washington. Some analysts have suggested that the president’s diagnosis could create something positive: an end to the Washington controversy over further aid to the economy.
“Markets could have some unexpected reactions, as this could break the calendar in the current stimulus negotiations,” wrote in a note Jamie Cox, CEO of Harris Financial Group.
But the diagnosis represents another wild card for Mr. Trump, whose tumultuous approach to world trade and domestic political negotiations has recently given way to even more troubling statements.
Mr. Trump has suggested he will not be willing to comply with the results of any vote that favors his own Democratic opponent Joseph R. Biden Jr., who shared the stage of the debate with Mr. Trump on Tuesday.
“There is now growing uncertainty about the election due to the health of the candidates,” said Randy Watts, chief investment officer of O’Neil Global Advisors, a financial advisory firm. “And I think it gives investors a lot of reasons to stop and not commit new funds to the market until we are much closer to the end of the election.”