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Stocks rose Friday. They capped off an impressive run of markets for President Joe Biden, and put equities at record levels ahead of Donald Trump’s Monday inauguration.
The S&P 500 rose 1% on Friday, putting it up 58% since Joe Biden’s inauguration on Jan. 20, 2021. The S&P 500’s performance during Biden’s presidency fell short of its nearly 70% return (excluding dividends) during Trump’s first term. This is also below the more than 80 percent return that was registered during Obama’s second term when the stock market recovered from the Great Recession.
Biden took office as president when stocks had soared off their low-points. The stock prices were lifted by the stimulus check, retail investors flooded in, and profits at major tech firms exploded. Biden’s rally came to an abrupt end after supply chain disruptions and rising oil prices combined with a large amount of money to cause the U.S. to experience its worst inflationary episode since the 1970s. Aggressive rate hikes by the Federal Reserve plunged stocks into a bear market, during which the S&P 500 lost about a quarter of its value. Launch of ChatGPT late in 2022 ignited the AI boom that’s propelled stock prices ever since.
Biden was also a great president for Dow Jones Industrial Average but it wasn’t as successful as Trump’s term or Obama’s. Under Trump, the Dow rose by more than 56% and under Obama it rose nearly 150%. Biden was in the White House for a much longer period of time than George W. Bush, who ruled between 2001-2009 and saw the Dow lose about 25%.
Biden’s Dow’s performance on an annualized base is just below the 50 year average but slightly higher than that of Democratic Presidents in the 20th and 21st centuries. Biden has the worst Dow performance among one-term Presidents since Jimmy Carter.
A president does not have much control over the stock exchange. The president’s statements can either boost or depress the stock market, while their policies may benefit or hurt certain industries. But Wall Street and its major indexes follow the ebbs and flows of the U.S. and global economies, on which a president's imprint is rarely visible before they're out of office.
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