How Trump's Tweets Seem to Be Affecting Stocks and CEOs
The power of a president-elect's tweet is not to be underestimated.
-- Donald Trump is known for airing his grievances and musings on Twitter, but now his opinions seem to be directly affecting the U.S. stock market and investors.
The most recent example came this morning after the president-elect said that he wants to reduce drug prices in his interview with Time magazine, which named him "Person of the Year."
Trump was asked about the rise in biotech stocks following his electoral victory. “I’m going to bring down drug prices. I don’t like what has happened with drug prices," he told Time.
Investors were not pleased with those comments. Shares of Pfizer fell 2.6 percent while Merck stock lost 1.9 percent this morning, The Associated Press reported.
Trump also appears to have embraced the power of the tweet as his latest negotiation tactic.
He sent out a tweet slamming “out of control” costs from Boeing for a new Air Force One plane on Tuesday, which led to a quick but fleeting plunge in the aerospace company’s stock.
It also led to a phone conversation between Trump and the company’s CEO Dennis Muilenburg.
“Muilenburg congratulated Mr. Trump on his election win and committed to working with the new administration to control costs as they establish requirements for the new Air Force One to keep the program as affordable as possible and deliver the best value to American taxpayers,” Boeing said in a statement released this morning.
On Tuesday, shares of Sprint jumped after Trump announced that Japan's SoftBank had committed to investing $50 billion in the United States, which could lead to 50,000 new jobs in the country. SoftBank has a majority ownership in Sprint.
Mark Zandi, the chief economist for Moody's Analytics, told ABC News that it should be expected that the markets would respond to Trump's tweets because "investors think words matter."
"I think when the president-elect names names, when he points out specific companies, it's not at all surprising that their stock prices respond to that," Zandi said.
Investors have pushed stocks to record highs after Trump's surprise victory, but Zandi said investors should brace for turbulence.
"I can't recall another president singling out companies for public comment -- certainly not on a regular basis -- but he seems to be willing to do that on an almost daily basis," he noted. "If his words have consequences and he acts on it, then investors are going to respond and I’d buckle in. There's going to be a lot of volatility in markets."
Investors aren't the only ones listening to Trump's public declarations and acting accordingly. Greg Hayes, the CEO of United Technologies, which owns the air conditioner manufacturer Carrier, told CNBC's Jim Cramer that his company agreed to keep jobs at a Carrier plant in Indiana because of UTC's significant contracts with the federal government.
"There was a cost as we thought about keeping the Indiana plant open. At the same time... I was born at night but not last night. I also know that about 10 percent of our revenue comes from the U.S. government," Hayes told CNBC.