Trading was mixed early on, but at roughly 11:18 a.m. ET word came from Washington news site Axios that the White House was prepared to fire Bannon, the chief strategist. The S&P, which was down 5 points, promptly rallied 7 points in a matter of minutes and another 5 points over the next hour. When The New York Times confirmed that Bannon was leaving at about 12:40 p.m. ET, the market moved up another 5 points.
In an interview with the American Prospect earlier in the week, Bannon had made a big point about stressing his battles with President Donald Trump’s chief economic advisor, Gary Cohn, and Treasury Secretary Steven Mnuchin, seemingly painting himself as a populist arrayed against the “globalists.”
But the markets clearly preferred ex-Goldman executive Cohn for the stability he provides. How much? Stocks dropped on Thursday on erroneous reports that Cohn might leave the White House, and have rallied on confirmation that his arch nemesis Bannon is gone.
Floor traders, who are overwhelmingly Republican, cheered here at the New York Stock Exchange when it was reported that Bannon was out. (Though, some later said part of that cheering was due to the departure of a colleague.)
They want a concerted effort to raise the debt ceiling, pass a budget resolution and then move rapidly to tax cuts. Friday’s gains is the market’s way of saying investors believe tax cuts are still alive.
The S&P started moving down after 1 p.m. ET, shortly after Breitbart’s Senior Editor Joel Pollack tweeted #WAR, implying Bannon and/or Breitbart may launch attacks against Cohn and Mnuchin.
The markets ending anywhere in the green would be a big victory for bulls and would reinforce the strategy that it is still safe to buy the dips.