Do Trump's words/speeches affect the markets?

As a recent example, after Trump's speech about the Charlottesville riots, news exploded about the negative impact it would have on the markets. Why is it when Trump talks about things seemingly unrelated to finance, the markets still react?

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August 2017
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Unfortunately, most information in the media will affect the market at the very least for the short term. Perceptions and emotions move individual stock prices and the overall market in the near term. If investors feel that good times are ahead for the economy and/or an individual company, the prices of those securities will probably go up until that perception changes. Investors’ perceptions and emotions are heavily influenced by news and the media. So when the government reports one day that unemployment is dropping, the market could do well that day.

But if another negative report is released the very next day on a potential increase in inflation, the market may decline. Additionally, there are quite a few news stories that are released throughout the day with many different forces at work which may move the market and stock prices at any given time including but not limited to the White House or President Trump.

Over the long term, feelings, thoughts and emotions have almost nothing to do with the market. It is all about real profits and interest rates. When you own stock in a company you really own a small percentage of a business. As the business becomes more profitable, the value rises. What people think or feel about the future of a company will impact its stock price over the short term. But the actual profits of the company will determine the stock price over the long term.

 

 

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