Joe Biden’s time in the White House has been positive for US stocks. -Illustration by MarketWatch/Getty Images, iStockphoto
US stocks ended the Joe Biden era on a high note as the president bid farewell to the White House.
The 46th President of the United States ended his time in the White House with the S&P 500 SPX rising more than 55% since he took office on January 20, 2021. The Dow Jones Industrial Average (DJIA) advanced more than 39%. In the same period, while the tech-heavy Nasdaq Composite jumped nearly 46%, according to Dow Jones market data.
However, the Dow Jones and Nasdaq saw their worst returns since George W. Bush’s second term between 2005 and 2009, while the S&P 500 posted its smallest gains since Barack Obama’s second term between 2013 and 2017, according to Dow Jones Market Data (see table less).
Source: Dow Jones market data –
To be sure, Biden’s presidential term began in 2021 with the escalation of the COVID-19 pandemic and economic downturn. Major stock averages still posted returns of more than 10% by the end of that year, as the global economy began its recovery from the pandemic, while the Fed maintained the supportive monetary policy measures first implemented in early 2020.
But in 2022, Wall Street suffered its worst year since the 2008-09 financial crisis amid the Russian invasion of Ukraine, while the US economy struggled with rising inflation and rising interest rates.
Then in 2023 and 2024, a tech-driven earnings rebound and AI craze pushed US stocks to historic levels. The S&P 500 hits back-to-back double-digit annual gains by the end of 2024 — and it starts now Its third year in a bull market.
David Russell, global head of market strategy at TradeStation, said there was a “huge surge” in cyclical sectors of the economy that benefited from the post-pandemic reopening and the Biden administration’s historic inflation-lowering law in 2022, which “really stimulated industrial activities,” he told MarketWatch on Friday: “In many ways this led to higher interest rates and a 2022 bear market.”
“But then the AI thing[was]a completely different (market tailwind) because it had nothing to do with Biden. “It was built for years before it came to fruition in early 2023,” Russell said.
Hopes have risen on Wall Street since President-elect Donald Trump won the presidential election in early November. Investors were betting that the former president’s return to the White House could further boost the US economy and businesses by providing tax breaks, cutting financial regulations and increasing tariffs.
But some of his economic plans could lead to a rise in the fiscal deficit and a return of inflation, which could hurt the government debt market and push interest rates higher again.
Stocks jumped sharply after Trump’s victory on November 5, but rose They erased some of their gains after the election In the following two months. The S&P 500 rose 3.7% from Election Day through January 17, its worst performance in that period since Obama was elected in 2008. The Dow Jones rose 3% and the Nasdaq rose 6.5% in the same period, According to Dow Jones market data. (See chart below).
Source: Dow Jones market data –
“The first thing that happened in the stock market since the election was the market went up with risky assets rising and interest rates falling. Then all of a sudden, Inflation fears have resurfaced …and we stayed With a steeper yield curvesaid George Cipollone, portfolio manager at Penn Mutual Asset Management.
Treasury yields rose last week after that Stronger than expected jobs data sparked sharp selling In the government debt market, which is creating a runoff for stocks and prompting investors to consider the possibility that the Fed may have to temporarily suspend interest rate cuts until later this year. Then comes this week’s relatively moderate CPI report This led to a sharp rise in stocks and bondswhich led to a 30-year decline in the prices of 10-BX:TMUBMUSD10Y and BX:TMUBMUSD30Y.
“We’ve normalized interest rates here over the long term, but every shift up or down in Treasury yields is going to have a big impact on the stock market,” Cipollone told MarketWatch by phone on Friday.
But in Russell’s view, “there’s no reason for investors to assume that Trump is going to do everything in a way that will cause problems” for financial markets and the economy, because all these concerns about tariffs boosting inflation might just become a “problem,” he said. The wall of anxiety that dissolves.
The stock market has moved “sideways” over the past three months and has traded around where it settled after Election Day, which has Russell and his team believing stocks could emerge from this “period of consolidation” very soon.
“Looking ahead, we see double-digit earnings growth. We see the Fed making pessimistic forecasts and cutting some of them.” These beliefs hawk That has emerged in the past few weeks, and we see the new president coming with executive orders (on deregulation).” “People who have been sitting on the sidelines may feel there is a reason to get more involved again.”
US stocks closed higher on Friday The last trading day of Biden’s term in office. All three major indexes posted weekly gains amid falling Treasury yields. Investors are also looking ahead to this week, when Trump is scheduled to be inaugurated as president for the second time.
