As published on reuters.com, Wednesday December 18, 2019.
(Reuters) - As U.S. President Donald Trump on Wednesday appeared on the brink of becoming only the third U.S. president ever to be impeached, history suggests investors need not worry, even though it adds uncertainty on Wall Street.
Billowing partisan divisions were on display as members of the House of Representatives engaged in a debate ahead of historic votes on two charges against Trump accusing him of abusing his power and obstructing Congress.
The Democratic-controlled House was widely expected to vote to impeach Trump. But the removal of Trump, a Republican, from office appeared unlikely because it would require the Republican-controlled Senate to convict him in a trial by a two-thirds majority.
With Wall Street focused this week on Washington's limited trade deal with China and most investors expecting Trump to keep his job, the S&P 500 hit an intra-day record high, extending its gain in 2019 to over 27%.
In 1974, Wall Street dropped and the dollar tumbled when President Richard Nixon was under threat of impeachment over the Watergate scandal. Nixon, however, resigned in August 1974, avoiding impeachment.
The market volatility in that period came against a backdrop of Nixon’s decision to suspend the dollar’s convertibility into gold and a recession following the oil shock of late 1973.
In 1998, after early volatility, Wall Street also weathered the impeachment of Clinton, who was later acquitted by the Senate.
The S&P 500 tumbled 10% in the 11 trading days leading up to Oct. 8, 1998, when articles of impeachment for Clinton were sent to the House. But the index recouped those losses by Oct. 21 and kept rising for the rest of 1998 to end the year up 27%.