Trump makes baseless claim that the stock market is plunging because of the prospect of Democrats investigating him

  • President Donald Trump attempted to link the possibility that House Democrats could investigate him to a recent downturn in stocks.

  • "The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!" Trump tweeted Monday.

  • After taking back the House in the midterm elections, Democrats could now look into the president's tax returns — and with them his finances and potential conflicts of interest.

  • But while the investigations are a real possibility, most market analysts attribute the recent decline to weak guidance by major companies and fears over trade war escalation — not the midterm results.

President Donald Trump on Monday attempted to pin a recent decline in stocks on Democrats, baselessly blaming the possibility of numerous investigations by House committees.

"The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!" Trump tweeted Monday.

The Dow Jones Industrial Average was down just over 400 points as of 11:30 a.m. ET.

While the stock market has been on rough footing lately, most analysts attribute the issues to major companies signaling weaker-than-expected future earnings and continued trade war fears, rather than the results of the midterm elections.

This is especially true since the results — Democrats winning the House and the GOP holding the Senate — came in as expected. Analysts say the likelihood of gridlock with a divided Congress is a neutral result for stocks and likely has little impact.

But Trump has for weeks claimed that a Democratic victory in the midterms would be negative for stocks and increased focus on the market in the run up to Election Day.

Following the midterms, Trump has doubled down on arguing that there is no reason for investigations into possible connections between the president's campaign and Russia. He has also reiterated his tax returns shouldn't be released.

But the biggest political problem for markets may not be Democrats, but rather a problem of Trump's own making. Continued pressure from the president's trade war and the possibility that the conflict could escalate has been cited as analysts as one of the biggest threats to the market's continued growth.

"This trade issue is clearly the wild card for both the global economy and investing," David Kelly, chief global strategist at JPMorgan Funds, wrote in a note to clients.

He added: "If 2019 brings with it a major escalation in the trade conflict with China, with no resolution in sight, it would be a significant negative for global stocks and US stocks and could lead to a higher dollar and lower interest rates."

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