Media Mistakingly Attributing Stock Market Rally to Hillary Win

The media (and not just the liberal media) may be wrongly attributing the strong move in the stock market to Trump’s narrow defeat in the first debate. On 9/27/2016, the day following the first presidential debate in which Hillary presumably ‘won’, the S&P 500 gains 14 points. The DJIA gained 133 points. Not huge amounts but still noteworthy.

From MarketWatch Dow closes up more than 100 points after Clinton-Trump debate, consumer confidence:

The advance in stocks suggests that U.S. equity markets are betting that Clinton benefited the most from Monday’s presidential debate. Stocks are rising on the prospect of a Clinton presidency because the Democrat is viewed as a known quantity while some view Trump as being more unpredictable—a bad thing for stock investors.

And also, there seems to be a consensus that Trump did well in the first thirty or so minutes of the debate, when he described his economic plans and attacked Hillary on NAFTA and TPP, but faltered in the second half, as the debate transitioned to foreign policy, Trump’s ‘birtherism’, and ‘sexism’, and Trump found himself on loose footing.

Here again: 20 minutes into the debate Donald Trump was winning. What the heck happened?

Hmmm…if Trump excelled in the first half and bombed in the second, we would expect stock futures to rise during the second half and not the first, but the actual live trading data as the debate unfolded shows that stock futures surged during the first half of the debate, specifically only 12 minutes into the debate (which began at 18:00 and and ended an hour and forty minutes later):

In the span of just seven minutes beginning at 18:12, the S&P 500 futures gained seven points. So what happened around 18:12 to make the market rise?

At 18:10, Trump pledges to reduces taxes significantly:

TRUMP: We cannot let it happen. Under my plan, I’ll be reducing taxes tremendously, from 35 percent to 15 percent for companies, small and big businesses. That’s going to be a job creator like we haven’t seen since Ronald Reagan. It’s going to be a beautiful thing to watch.

Two minutes later, the futures begin to surge. The market knows that regardless of the outcome of the debate, there is a non-trivial likelihood Trump will become president, and they are worried that Trump’s populism will hurt profits and earnings, but Trump’s huge tax pledge allayed some of those concerns. That’s why stocks surged, because Trump promised pro-growth policy (which was the main concern), not because Hillary did anything special.