The real reason why the stock market is down
Posted November 12, 2018 12:14 p.m. EST
(CNN) — Why are stocks falling again? President Trump says it's because Democrats are gearing up to use their impending control of the House of Representatives to investigate him. As always, when it comes to the markets, the real answer is complicated.
The Dow fell more than 400 points on Monday, dragged down by investors' concerns about the tech and utility sectors. The Nasdaq fell 2.6% and the broader S&P 500 fell 1.5%.
Apple (AAPL) fell 5% after supplier Lumentum cut its earnings and sales forecast because of weak demand. That weighed on other technology stocks, including Amazon (AMZN) and Tesla (TSLA) -- down 4% -- as well as Facebook (FB), Google (GOOGL), Netflix (NFLX) and Microsoft (MSFT) -- all down 2%.
Though Trump blamed Democrats for the drop, the Dow had actually roared back since the midterms, rising 500 points last week -- its best showing since March. The stock market tends to like stagnation in Washington, so investors are actually just fine with Democrats taking the House.
As for what Trump termed the "prospect of presidential harassment," there is not much evidence the stock market will bat an eye if Democratic leaders in the House begin investigations into the Trump administration. Stocks rose before, during and after President Bill Clinton's impeachment.
Stocks fell in the run-up to President Richard Nixon's impeachment proceedings and for a few months after he resigned. But the economy was in recession at the time.
The stock market had risen steadily after Trump's election through 2017. But it hit a hiccup in January 2018 after Trump introduced the first of many tariffs aimed at growing the US steel industry and reducing America's purchases of foreign-made products. Stocks rebounded in the middle of the year but have swooned again because investors are worried about rising rates -- and a mountain of debt caused by the tax cut bill that higher rates will make more expensive to pay off.