President Donald Trump says the midterm election did more than hand Congress to the Democrats.

He says it cost American investors roughly $3 trillion in a single day.

In a new Sunday statement, President Trump called the election results a “giant step back in History” and pointed directly to Thursday’s historic market selloff. He described the market as a “ROCKETSHIP” under his administration before the one-day wipeout.

The president ended on a defiant note: “But we will be back, bigger and stronger than ever before.”

That is a staggering number—and the loss was real.

ADVERTISEMENT

But the trading sequence also tells a more complicated story about what Wall Street believes the Democratic takeover could mean for artificial intelligence, regulation, taxes and the next two years of divided government.

The president’s Sunday message quickly put the $3 trillion figure back at the center of the post-election debate:

Thursday’s selloff was brutal by any measure.

The Associated Press reported that the S&P 500 fell 4.4 percent, the Dow Jones Industrial Average lost 1,833 points, or 3.4 percent, and the Nasdaq Composite dropped 5.5 percent. Fortune calculated that Thursday’s rout erased roughly $3 trillion from U.S. equities.

The decline hit technology shares especially hard. Investors who had spent months pushing AI-related companies to record valuations suddenly reassessed what a Democratic Congress could mean for regulation, data-center construction, energy demand and the enormous spending behind the artificial-intelligence boom.

Those losses were large enough to hit retirement accounts, brokerage balances and corporate valuations across the country in a matter of hours. The move stopped short of the seven-percent S&P decline that would trigger the first market-wide circuit breaker, but it ranked among the sharpest post-midterm reversals on record.

The president did not invent the market damage. The argument is over how much of it should be assigned directly to voters’ decision.

The first market reaction to the election went in the opposite direction.

Stocks rallied sharply on Wednesday, the first full session after Democrats won control of both chambers. The Dow jumped more than 1,500 points, and the S&P 500 posted its best post-midterm rally in decades before Thursday erased those gains.

ADVERTISEMENT

That two-day whiplash makes a one-cause explanation difficult.

Fortune reported that the market’s post-election celebration lasted only one session before chip stocks and other AI leaders plunged. By Thursday, roughly $3 trillion had vanished from U.S. equities, and the Dow was headed for its worst second trading day after a midterm election in data reaching back to 1896.

The report tied the reversal to growing fear that the AI trade had moved too far, too fast. A Democratic Congress added another source of uncertainty, especially for companies facing demands for tougher technology oversight, but the selloff also reflected stretched valuations and concern about whether massive AI spending will produce profits quickly enough.

In other words, the election may have been a catalyst without being the only cause.

CBS News summarized President Trump’s broader Sunday response to the election:

Friday’s trading showed the market was not moving in a straight line.

The Nasdaq gained 264 points Friday as battered chip stocks bounced, recovering less than one-fifth of Thursday’s 1,421-point plunge. The partial rebound underscored an important point: a market-cap loss measures the change in what investors are willing to pay at that moment, rather than cash physically disappearing from a vault.

The same principle works in reverse. When stocks recover, that market value can return rapidly.

The political fight is only beginning.

ADVERTISEMENT

President Trump has spent years pointing to market records as evidence that his economic program works. It follows that he would treat a sudden collapse after a Democratic victory as a warning about what the opposition’s agenda could cost.

Democrats will argue that investors were reacting to an overheated AI sector, uncertainty about the Federal Reserve and the accumulated risks already sitting in the market. They will also claim voters gave them a mandate to challenge the president’s tax, energy and regulatory policies.

Both sides now have real power. Democrats will control the legislative calendar, investigations and spending negotiations, while President Trump retains the veto and control of the executive branch.

That is the new reality Wall Street must price every day.

President Trump’s $3 trillion warning should not be dismissed. The one-day destruction in market value was enormous, and the timing placed it squarely inside the political shock that followed the midterms.

But the next test will matter even more: whether investors treat Thursday as a temporary panic—or the first installment of a much larger bill for divided government.

This is a Guest Post from our friends over at WLTReport. View the original article here.

 

Join The Conversation. Leave a Comment.