The Blubber

The White House on Monday downplayed the ongoing stock market sell-off, arguing that recent actions by business leaders indicate a more positive outlook for the U.S. economy.

“We’re seeing a strong divergence between the stock market’s ‘animal spirits’ and what businesses and business leaders are actually doing,” a White House official told reporters.

“The latter is obviously more meaningful than the former in terms of what’s ahead for the economy in the medium to long term,” the official added, speaking on condition of anonymity.

In economic terms, “animal spirits” refer to how investor sentiment—driven by emotions rather than pure logic—can influence market trends. The White House appeared to use the phrase to suggest that the sell-off was fueled by irrational fears rather than economic fundamentals.

However, experts point to several factors behind the market downturn, with the biggest being President Donald Trump’s shifting trade policies. After imposing 25% tariffs on imports from Mexico and Canada last month, Trump paused them, only to partially reinstate them last week, creating uncertainty among investors.

Adding to market concerns are the widespread firings of thousands of federal employees, overseen by billionaire Trump advisor Elon Musk. This uncertainty has led to a sharp reversal of the bullish optimism that drove market gains late last year.

On Monday, the Dow Jones Industrial Average tumbled nearly 900 points, the Nasdaq had its worst session since 2022, and the S&P 500 dropped 2.7%. The sell-off has now stretched into its third week.

“You’ve certainly seen some of the animal spirits that fueled the stock market rally in the fall fade,” said Scott Lincicome, vice president of general economics and trade at the libertarian CATO Institute.

“People are focusing more on downside risks, the prospect of higher prices, and all the uncertainty,” Lincicome told CNBC. “And that, I think, can be directly traced back to the president.”

Trump Shifts Focus Away From Markets

Trump, who frequently pointed to stock market gains as a measure of economic success during his first term, has recently shifted away from using markets as a key indicator. Instead, the White House is emphasizing major investment commitments from businesses as proof of economic strength.

On Monday, White House spokesman Kush Desai said several major corporations have pledged to invest hundreds of billions of dollars in the U.S., attributing these moves to Trump’s re-election and confidence in his economic policies.

Some of the biggest commitments include Apple’s announcement of a $500 billion investment plan, along with significant pledges from SoftBank, Taiwan Semiconductor Manufacturing Co., and Eli Lilly.