There doesn’t seem to be much in the Trump administration merry-go-round that can swamp the stock markets.
The president fired his top diplomat, Secretary of State Rex Tillerson, on Tuesday morning after 13 months on the job.
His top economic adviser, Gary Cohn, quit last week.
The director of the Central Intelligence Agency will take over from Tillerson, and a new director will step up.
Trump’s recent threat of tariffs on aluminum and steel imports, creating fears of an international trade war, have been put on hold pending the conclusion of a new North American Free Trade Agreement.
So what happened to the stock market?
The Dow Jones industrial average, Nasdaq Composite and the Standard & Poor’s 500-stock index were their 2018 selves, bouncing around during a busy news day that included tariff threats against China on intellectual properties.
The technology-laden Nasdaq finished down 77 points — about 1 percent — at 7,513, snapping a seven-day win streak. The Dow, which was down 231 points at its low, finished down 171 points — 0.68 percent — to close at 25,006.
Leading the Dow was UnitedHealth Group, Johnson & Johnson and chip-maker Intel. General Electric and Microsoft lagged.
The S&P 500 closed down 17 points — 0.64 percent — to close at 2,765.
“There’s been a lot of turnover in this administration, and the markets have come to terms with that,” said Ed Yardeni, president of Yardeni Research. Remember, he said, “we’ve got a president who was the star of ‘The Apprentice,’ where the key line was ‘You’re fired.’”
The blanket news coverage of the White House has telegraphed so much intrigue that the market is able to bake what-ifs into its prices far in advance of any official firings or resignations.
Tillerson’s departure had been rumored for months, ever since it was reported that he called the president a “moron” during a meeting last July with Cabinet officials at the Pentagon.
“Tillerson’s departure has been widely expected,” said Washington investment manager Michael Farr. “No surprise.”
The Dow closed Monday about 5.4 percent below its all-time high of 26,616, which was set Jan. 26. The Dow is still up 1.7 percent this year.
The technology-heavy Nasdaq Composite closed its second consecutive record high on Monday, and was up 10 percent in 2018. The S&P is up just under 4 percent on the year.
Tuesday got off to a positive start at 8:30 a.m., when the Labor Department announced that consumer prices rose 0.2 percent last month, which was in line with expectations. The news calmed inflation fears. It followed the Labor Department’s monthly jobs report on Friday that showed robust job creation but limited wage growth. That report spiked markets up more than 440 points.
Tuesday’s CPI report pushed the Dow up another 100 points before it retreated.
“This report all but guarantees an interest rate hike from the Fed at next week’s meeting,” said Jeff Carbone, managing partner for Cornerstone Wealth. “Now we need to look and see if we get three or four hikes this year.”
Markets dropped 10 percent a month ago when the CPI reported its biggest jump in four years, setting off fears that a festering wave of inflation was coming to bear. The markets have largely recovered on good news since then.
Within minutes of the CPI report, Trump announced in a tweet that Tillerson had been fired after 13 months and would be replaced by CIA Director Mike Pompeo.
“Once again, the most important thing is the dog that didn’t bark,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “Markets were expected to drop on the announcement of tariffs – and didn’t. Then Cohn’s resignation was expected to drive them down – and didn’t. Today, the replacement of Tillerson as Secretary of State is also failing to rock markets.”
McMillan said last month’s correction may have driven most of the nervous investors from the market, leaving ”a much tougher crowd.”
“For those investors, the continued strong job growth and confidence across the board suggests company earnings – and therefore stock prices – are likely to keep improving,” he said. “I expect the markets to stay well supported – and likely head higher – until the economic news softens.”