It is freighted with anxious connotations for many Americans, who remember the tumultuous end of the Nixon administration in August 1974 and the national mood at the time. From a capital markets perspective, it was also a grim period. The S&P 500 fell 26% in 1974, tagging on to a 14% drop the prior year. That memory casts a long enough shadow that S&P futures dropped +10 handles yesterday afternoon after the Cohen/Manafort convictions on fears the US is doing a slow motion tumble into a political crisis.
That US stocks recovered yesterday is a good reminder that 2018 is not 1974. Recall that the country entered a deep recession in 1973 on the back of much higher oil prices (caused by a shooting war in the Middle East and Saudi embargo) and a weaker dollar (which ended a global system of fixed exchange rates). Now, we have 20% earnings growth in 2018, a good economy, low/stable interest rates and a rising dollar. From a macroeconomic standpoint, things are very different indeed.
Still, we have little doubt that a political event on the scale of a presidential impeachment would roil markets until the issue was resolved. Consumer confidence would likely take a hit as Americans engaged in a spirited national debate on the topic. Business investment might slow as managers took a wait-and-see approach to political developments. Whether this would cause a 5% pullback in US stocks or more is as unknowable as the exact timeline of how all this might unfold.