Trump’s Thumps Don’t Cause Stock Slumps

Wall Street is learning to live with President Donald Trump’s criticism of prominent companies.

Trump has made a habit of attacking well-known public corporations, including Amazon, Harley-Davidson and Google. In some cases, his supporters have piled on with threats to boycott the companies’ products or services. The stocks of those firms have come under pressure as investors worry that business will suffer.

But a look back at months of critical presidential tweets, and their effect on stock prices, suggests that investors are shrugging off Trump’s broadsides. The stocks of targeted companies typically recover, and there is little, if any, discernible harm done to their business.

Nike is the latest firm Trump has singled out. The sportswear company confirmed this week that it had entered into a new marketing deal with Colin Kaepernick, the former NFL quarterback. Kaepernick made headlines in 2016 for kneeling during the national anthem to protest police brutality and racism, and has not played in the NFL since the end of that season.

On Wednesday, Trump said on Twitter, “Just like the NFL, whose ratings have gone WAY DOWN, Nike is getting absolutely killed with anger and boycotts. I wonder if they had any idea that it would be this way?”

Since Monday, people have taken to social media to say they were going to shun Nike, while others have pledged to buy company’s products. Nike’s stock dropped 3.16 percent Tuesday, its fourth-largest daily decline this year. It has risen since and is up 28 percent in 2018.

Nike may yet suffer. The same people boycotting the NFL because of player protests during the national anthem may shun its products. Companies selling a narrow range of items to consumers are most at risk to a buyers’ strike. But Nike may also benefit. Trump’s castigations, and Nike’s support of Kaepernick, may generate higher sales.

At a time when most corporations are riding high on the strong economy, Trump’s denunciations may not have much effect. Amazon is perhaps the strongest example of this resilience. The president has criticized Amazon many times this year, contending that the U.S. Postal Service undercharges Amazon for its services. But Amazon’s shares have rallied over 70 percent this year, and this week the company’s value on the stock market temporarily exceeded $1 trillion.

Still, Trump’s criticisms can at times seem to affect the shares of the companies he targets.

In recent months, he has berated Harley-Davidson for planning to shift some of its production outside the U.S. to avoid levies the European Union imposed in response to the tariffs the Trump administration put in place. Harley-Davidson’s stock had a rocky summer. The president’s tweets may have contributed to its weakness, but investors were probably much more concerned about the trade war’s effect on Harley-Davidson’s business.

Even so, the company’s shares have recently rallied and now trade at more or less the same price they did just before the announcement of its production shift.

This suggests that investors may have adopted a simple rule: Keep an eye on what the government does, not what the president says.

In December, Trump warned on Twitter that Wells Fargo faced stiff penalties for mistreating its customers. The bank’s stock rose in the following weeks, on the back of investors’ bullishness about tax cuts and economic growth. It then plunged in early February after the Federal Reserve hit the bank with stringent regulatory actions. The Fed’s crackdown would have almost certainly happened had Trump not been president.

And even if the Trump administration were to threaten more actions against companies, it may not succeed in doing much harm to the firms, or it may simply fail to follow through.

In June, a federal judge ruled against the administration and approved the merger of AT&T and Time Warner. And despite Trump’s threat in October to change tax laws to penalize the NFL, the tax act that Congress passed at the end of last year did not do so.

Right now, companies with large social media networks like Facebook, Twitter and Google are in the cross hairs. The Justice Department said it planned a meeting this month with state attorneys general to look at whether such companies were “hurting competition and intentionally stifling the free exchange of ideas on their platforms.” But the effort may not come to much, given the constitutional protections on speech.

Investors may hope that Trump’s tweets amount to little more than noise, and that the rule of law and other constraints will prevent him from taking actions that could harm corporate profits.

Except there’s trade policy, where Trump has been allowed to do mostly as he likes. The stock market rallied even as the Trump administration imposed some tariffs. But the costs of the trade war could rise sharply if Trump goes ahead with his threat to impose tariffs on an additional $200 billion of Chinese products.

Any tweets from the president on this battle could move markets.