U.S. President Donald Trump was officially impeached by the House of Representatives on Wednesday night. Fortunately for investors, the market doesn’t seem to mind. The S&P 500 is making new all-time highs this week, and the SPDR S&P 500 ETF Trust (NYSE: SPY) opened slightly higher on Thursday.
While the news media and politics junkies hang on every headline out of Washington, investors seem remarkably indifferent to the impeachment process. One of the factors giving investors confidence may be the Bill Clinton impeachment in 1998.
During the Clinton impeachment from October 1998 to February 1999, the S&P 500 rallied more than 26%. This time around, the S&P 500 is already up 7% since House Speaker Nancy Pelosi announced Trump’s impeachment inquiry back in September.
Market Experts React To Impeachment
Several analysts and experts have weighed in about what impeachment means for investors.
Jim Cramer said it’s somewhat concerning that a wave of late selling on Wednesday was not met by dip buyers.
“Even if we have a few down days coming up ... market history says it’s a mistake to freak out about the impeachment process,” Cramer said. He thinks Wall Street cares much more about company fundamentals than Washington drama.
UBS analyst Thomas McLoughlin said it’s not surprising to see minimal market reaction to the impeachment process. McLoughlin said investors are much more concerned with global trade and economic growth than they are with partisan politics.
“The relaxation of trade tensions, a more dovish Fed, and some upbeat economic data have buoyed investor sentiment,” McLoughlin said.
Wells Fargo analyst Truman Patterson said U.S. presidential elections have historically not had a significant impact on the housing market, and any disruptions in Mid-Atlantic region related to impeachment would likely be temporary.
“Regarding the Mid-Atlantic region, we believe the impeachment trial creates a near-term headwind, which turns to an intermediate-term tailwind due to positive election year demand outcomes,” Patterson wrote in a note.
Patterson said the impeachment may create an overhang for builders such as NVR, Inc. (NYSE: NVR), Toll Brothers Inc (NYSE: TOL) and TRI Pointe Group Inc (NYSE: TPH), but investors should expect that overhang to clear should the Senate acquit Trump as expected.
One of the reasons markets are reacting so little to the impeachment process is that it's looking increasingly likely the Senate will acquit Trump, potentially removing a degree of uncertainty from the market. There is currently only about a 6% chance the Senate convicts Trump by the end of his first term, according to PredictIt.
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Photo credit: Gage Skidmore