White House economic adviser Larry Kudlow says that Wall Street is plunging because of fear Democrats will win midterms and end President Donald Trump’s “pro-growth policies.”
Kudlow, speaking to reporters outside the White House on Tuesday, blamed the market decline on mid-term elections, CNBC.com reported.
U.S. stocks slumped broadly in early trading Tuesday, sending the Dow Jones Industrial Average down more than 500 points and extending the market’s recent string of losses.
However, many experts contend the latest wave of selling came as investors grew increasingly unsettled by the prospects for China’s economy and the cost of Trump’s aggressive trade policies.
However, Kudlow, who served as the Trump campaign's senior economic adviser, sees a much more polticial angle to the selloff.
"I think the stock market is worried that Congress will change and will overturn these pro-growth policies," the veteran financial guru and former Ronald Reagan adviser said.
The "correction has to overcome the uncertainty about this election," said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
Meanwhile, global markets have been spooked since China reported on Friday that its economy grew 6.5 percent from July to September from a year earlier, the slowest pace since early 2009. The world’s second-largest economy was cooling even before the outbreak of a tariff war with Washington, the Associated Press reported.
Markets have been rattled in recent weeks by increased worries over the impact that rising interest rates, inflation and the escalating trade dispute between the U.S. and China may have for corporate profits.
Trump has imposed tariffs on about $250 billion in Chinese imports, and Beijing has retaliated by targeting $110 billion in American products. Trump has threatened to tax another $267 billion in Chinese products — a move that would cover virtually everything China ships to America, the AP explained.
The two countries are locked in a dispute over U.S. allegations that China steals U.S. technology and forces U.S. companies to share trade secrets in exchange for access to the Chinese market.
Shares of Caterpillar tumbled after the heavy equipment manufacturer warned Tuesday that Trump’s taxes on imported steel were driving up production costs. The stock plunged 9.4 percent to $116.56.
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