While former President Trump’s latest indictment rocked political and media circles Tuesday evening, the news was likely not a factor in market losses Wednesday morning.
“A fundamental market tenet is that market prices are based on expectations, not realizations. The Trump indictment was widely anticipated, so while a seismic event politically, it really isn’t a major event with respect to capital markets,” Robert Johnson, a finance professor at Creighton University’s Heider College of Business, told The Hill.
The indictment, filed shortly after 5 p.m. Tuesday, alleges Trump conspired to overturn the 2020 election results.
The former president falsely claimed he won the presidential election in the run-up to and after the deadly attack on the U.S. Capitol on Jan. 6, 2021, the day Congress was slated to certify the results.
“It can be said that the market weathered [Jan. 6] very well, but how the democracy weathers that is an entirely different question, which does have huge implications for our economy and standard of living in this country,” Mark Hamrick, senior economic analyst and Washington bureau chief at Bankrate, told The Hill in a phone interview.
The Trump indictment was a “nonevent” for the market, JJ Kinahan, CEO of IG North America, the parent company of the brokerage tastytrade, told The Hill.
“The market is much more concerned with the downgrade of the U.S. by Fitch,” Kinahan wrote.
Fitch surprised many investors when it downgraded the U.S. credit rating from AAA to AA+ on Tuesday evening, citing the rising national debt and repeated debt ceiling standoffs.
On Wednesday morning, the Nasdaq dropped 2.4 percent, the Dow Jones Industrial Average slid 0.6 percent and the S&P 500 was down 1.3 percent, CNBC reported.
American political instability reflected in part by the Jan. 6 insurrection factored into the downgrade, Richard Francis, a senior director at Fitch, told Reuters.
Michael Arone, a managing director of State Street Global Advisors, told Yahoo! Finance he predicted markets will largely ignore the Trump indictments until the election — and potential trial dates — grows closer.
“Until we get more clarity in terms of the implications of the outcome here, I think the market will mostly ignore a lot of the politics,” Arone said.