Stocks Surge as Biden Presidency Winds Down, Nearing Record Highs Ahead of Trump Inauguration
Washington, D.C. - Amid a strong run for markets under President Joe Biden, stocks climbed 1% on Friday, placing them close to all-time highs ahead of President-elect Donald Trump's inauguration on Monday. Since Biden's inauguration on January 20, 2021, the S&P 500 has risen 58%, reflecting a period of economic recovery.
Market Performance under Biden
Despite the rise in the S&P 500, Biden's presidency has not matched the strong returns experienced during Trump's first term or Obama's first term. The S&P 500 fell short of Trump's nearly 70% return (excluding dividends) and Obama's over 80% return.
Initially, Biden's presidency saw a surge in stocks driven by stimulus checks and the influx of retail investors. However, challenges such as supply chain disruptions, rising inflation, and aggressive rate hikes by the Federal Reserve led to a bear market in 2022.
Impact of ChatGPT and Dow Jones Performance
In late 2022, the launch of ChatGPT sparked an AI craze, contributing to the recent rally in stocks. Similarly, the Dow Jones Industrial Average has performed well under Biden, rising more than 56%, but still lagging behind both Trump's first term and Obama's two terms.
Historical Context
On an annualized basis, Biden's Dow performance is slightly lower than the 50-year average but exceeds the average for Democratic presidents in the 20th and 21st centuries. Among one-term presidents, Biden's Dow performance is the weakest since Jimmy Carter.
The Role of the President
While presidents have limited direct influence over the stock market, their policies and statements can impact market sentiment. However, market trends are primarily driven by broader economic factors beyond the control of any individual president.