TABLE 4: Market Impact of Presidential Impeachments
Impeached
Impeachment
date index
level
https://www.globalfinancialdata.com/thestock-market-and-the-impeachment-ofandrew-johnson/
Impeachment
date to
vote date
(Index level
and return)
Vote date
(intraday, open
to close)
Vote date to two
months later
Andrew Johnson 2, 3 March 1868 16 May 1868 27 May 1868* N/A July 1869
Index (GFD rail) level 11 11 11 12
Pct change 0.09% 1.93% 1.74%
Bill Clinton 19-Dec-98 12-Feb-99 12-Feb-99 12-Apr-99
Index (DJIA) level 8,903 9,274 open: 9,367 10,339
Pct change 4.17% close: 9,274 11.48%
chg –0.99%
Donald Trump 18-Dec-19 5-Feb-20 5-Feb-20 6-Apr-20
Index (DJIA) level 28,239 29,290 open: 29,048 22,679
Pct change 0.30% close: 29,290 –22.57%
chg 0.83%
Average return: 1.83% –0.16% –9.35%
* The Johnson impeachment saw an initial vote on one count on May 16, 1868 and, after a 10-day recess, another vote on two additional counts (May 27, 1868).
The trial was adjourned with the other counts never voted on.
in the Senate allows observers to discount
the outcome well in advance of a vote.
Compare the market reactions to
impeachment with the demise of a wellregarded
corporate executive: Steve Jobs of
Apple, Inc. Before he died in October 2011,
he had been on sick leave for months and his
uncertain health had been a drag on Apple’s
stock performance. When it was reported
that he finally passed away, the stock fell
only 0.2%, no doubt in part because expectations
of his demise had mostly been priced
into the stock. Similarly, the average intraday
index return on the day of impeachment
votes is an insouciant –0.16%.
Another conclusion can be drawn; this
one from the two-month post-impeachment
equity index returns: +1.74% for
Johnson; +11.48% for Clinton and −22.57%
for Trump. In the case of Clinton, US
equity markets were within a bull market
of historical proportions, in particular for
technology stocks. In the case of Trump,
not long after the impeachment vote the
coronavirus pandemic took the world by
surprise. From the perspective of the markets,
impeachment fears fade quickly, with
attention rapidly shifting back to macroeconomic
issues.
Equity market reactions associated with
the proposed constituents of impeachment
concerns—general uncertainty, removal of
a key decision maker and uneasiness specifically
relating to the removal of the top
political executive in the United States—
do not approximate what occurs during
and after impeachment trials.
Each impeachment case is idiosyncratic
and associated with unique financial
market outcomes. The gradual unfolding
of what is fundamentally a political
(as opposed to strictly legal) action
tends to result in dampened, rather than
heightened, volatility owing to the pace
of the proceedings. The evidence suggests
that a more profound degree of political
upheaval, with a more sudden onset, is
required to reliably throttle stock prices.
Peter C. Earle is a Research Fellow at
the American Institute for Economic
Research.
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30 FINANCIAL HISTORY | Summer 2020 | www.MoAF.org