Will Trump Step In to Stop the Market Selloff?
Market analysts suggest that the S&P 500 would need to experience a decline of at least 10% to activate the so-called ‘Trump put.’
The recent downturn in the U.S. stock market has been modest, with the S&P 500 still only 3% below its record closing high from the previous week. Nevertheless, speculation persists on Wall Street about whether the Trump administration would intervene if the selloff were to intensify.
Michael Hartnett, a strategist at Bank of America, shared his perspective on Bloomberg TV, suggesting that intervention would likely occur “if things go haywire.” He estimated that action might be triggered if the S&P 500 drops to around 5,600 or 5,700, possibly through fiscal policy adjustments or relaxing the Department of Government Efficiency (DOGE) spending cuts.
The concept of the ‘Trump put’ originates from the belief that Trump perceives the stock markets as a barometer of his administration’s success. This notion is similar to the earlier ‘Fed put,’ where investors anticipated the Federal Reserve would intervene to mitigate market volatility.
During Trump’s first term, he frequently touted stock market gains as evidence of his policies’ effectiveness. However, the administration’s responses to market volatility were mixed. In late 2018, amid a nearly 20% market drop driven by the trade war with China and Federal Reserve rate hikes, Trump’s efforts to reassure investors had limited success. Conversely, the aggressive fiscal stimulus and Federal Reserve actions during the COVID-19 market crash in 2020 helped stocks recover quickly.
Whether the administration would take similar action this time remains uncertain. Some analysts believe Trump’s current focus on spending cuts and trade tariffs might make him more accepting of market fluctuations. Recent statements from Trump and his team suggest that any economic pain from tariffs and budget reductions could be seen as necessary sacrifices.
There is also speculation that Trump’s new ‘put’ might prioritize the bond market over stocks. Treasury Secretary Scott Bessent and Elon Musk, a special government employee, have emphasized the administration’s commitment to reducing the U.S. budget deficit—a strategy that could boost demand for bonds. Musk recently remarked that betting against bonds could be an unwise move.
While the notion of a ‘Trump put’ remains speculative, some experts argue that any substantial market downturn might attract buyers without requiring government intervention. If the S&P 500 were to decline by 10% or more, investors will closely monitor both market developments and the administration’s response.
