Wall Street ends the volatile month in a major test for Trump

Wall Street closed a wild August month with a slight rise in the Dow Jones index on Friday, thus closing a tumultuous month for the global economy that caused a wave of volatility in the financial markets and posed a challenge for President TrumpDonald John TrumpTrump will welcome Kuwait's leader to the White House in September at the White House. West Virginia governor poll: Manchin leads GOP justice by 10 members of US forces killed in action in Afghanistan MORE.

The Dow Jones Industrial Average, the S & P 500 Index and the Nasdaq closed the last day of August at trading, but their position has hardly changed from Friday's opening. Dow and S & P advanced only 0.2% and 0.1%, respectively.

But the three indices were well below their levels at the beginning of the month, after a notoriously tough period for Wall Street. The Dow fell 1.76% in August, down 474 points. This month, the index suffered two of its seven biggest losses, up 800 points on August 14 and 767 points on August 5th.

The S & P posted a similar decline of 1.84%, while the Nasdaq, which has a high technicality, lost 2.6% in August, ahead of new tariffs on consumer electronics made in China . Overall, major US indices remain close to the records they had recorded earlier this summer, and equities have generally skyrocketed since President Trump took office in 2017.

But the August bullwhip for Wall Street seems to be spreading over the fall, a worrying prospect for Trump.

The president is counting on a strong economy to attract voters from critical pivot states for his re-election campaign in 2020. An unemployment rate close to historic lows, strong economic growth, rising wages and booming consumer spending Trump enough data to support his case.

Recent upheavals also threaten to undermine this, as Trump has often linked the success of his economic program to the daily vagaries of the stock market. The month of August comes at a critical time for the President, who is worrying more and more about his trade wars with China and Europe and worry about a recession imminent.

Trump tried to calm worried traders by denouncing the progress made towards an agreement with China.

"The actions have been boosted by China's willingness to solve business problems with the United States with a" calm "attitude," wrote Ryan Sweet, director of real-time economics at Moody's Analytics, in a note. Thursday. "We have seen these ceasefires turn out to be short-lived. Therefore, this does not change our subjective chances of reaching an agreement, which remains weak. "

The president also talked about, if not joked about, some of the bloodiest losses in August on Wall Street.

Asked by journalists at the Group of Seven (G-7) summit on financial market turmoil caused by his trade policy, Trump said, "Sorry, that's how I negotiate."

Last Friday, as the Dow Jones closed with a 2.4% loss on August 23 after China announced new tariffs, the president quipped that stocks were falling because Rep. Seth MoultonSeth MoultonThe Morning & # 39; s Morning Report – Hurricane to Florida Changes Donald Trump's Travel Plans Democrats Excluded from Debate Face a Battle for Survival The Hill & # 39; s Morning Report – President Gillibrand leaves office as the number of debates decreases MORE (D-Mass.) Suspended his presidential campaign of 2020.

As Trump struggled to contain growing fears of a recession, the US economy showed undeniable signs of slowing down in the face of global headwinds and the rising costs of its commercial battles. Declines in the UK and Germany, weaker growth in China, and numerous geopolitical risks have also dampened economic prospects in the United States.

The numerous claims and massive fluctuations seen on Wall Street in August caused the biggest drop in consumer confidence since 2012, according to the survey of consumer confidence that was closely monitored by the University of Michigan.

"While the overall level of confidence is still consistent with modest gains in consumption in the coming year, the data has nevertheless increased the likelihood that consumers will be able to be removed from the tariff in the coming months" said Richard Curtin, economist at the University of Michigan. and director of the survey on consumer confidence.

"This could lead to much slower growth in consumption and the economy in general," he added.

Trump is also increasingly responsible for the obstacles faced by the economy. In a poll of registered voters released Wednesday at Quinnipiac University, 41 percent of those surveyed blamed the president's policies for harming the economy, the highest level since the Trump function.

Consumer spending accounts for about 70% of the US gross domestic product, and households have fueled the strength of the economy by generating large expenditures, even in the face of increasing anxiety. This dynamic makes the decline in consumer confidence a critical warning of a broader economic downturn.

"Consumers took advantage of their savings to spend more in July," said Diane Swonk, chief economist at Grant Thornton, in a research note released Friday. "We do not know how long they will continue to do so, given the slowdown in revenues and the prospect of new rates on the horizon."

While declining stocks are raising fears, Trump has been able to remain under growing pressure from businesses, farmers and his own party to end his trade war with China.

The president has dismissed fears of a recession, accusing Democrats and the media of trying to sabotage the economy to defeat his campaign. It has also stepped up its pressure on the Federal Reserve to reduce interest rates to near zero levels in European countries facing more serious threats.

"If the Fed went down, we would have one of the biggest rises in the stock market for a long time," tweeted Trump on Friday. "Mismanaged and weak businesses cleverly charge these small rates instead of themselves for mismanagement … and who can really blame them? Excuses!"

Tomas Philipson, president of the Council of Economic Advisers of the White House (CEA), said that the journalists who wrote about the economic slowdown seemed to "want people to lose their jobs" and "do not become economically independent".

"The way the media reports that the weather will not have an impact if the sun shines tomorrow," Philipson told the New York Times in an interview on Thursday. "But the way the media report our economy is weighing on consumer confidence, which is affecting consumers' purchases and investments."

Although Trump and his top aides are hijacking the charges and minimizing the concerns, the president has explored several ways to protect consumers from the damage caused by the slowing economy.

Trump delayed the introduction of new tariffs on Chinese products from December 1 to December 15, which he said was intended to protect consumers from the higher costs of holiday shopping.

The president also explored a potential tax cut equal to the costs of rising tariffs on consumer goods from China, an idea put forward by Senator Rick Scott (R-Fla.) In a conversation with the chief economic advisor. from Trump, Larry KudlowLawrence (Larry) Alan KudlowMORE.

"You can not do anything other than tariffs," Trump said Thursday. "And by the way, I'm doing something else too."

But the president also insisted that his commercial approach would generate benefits, an approach that has worried market watchers about increased volatility.

"The most important thing is tariffs," Trump said Thursday about his victory in the trade battle with China. "It has a devastating effect and they come to the table and we will see whether they reach an agreement or not."