If You Look at the Stock Market by President, and How It Performed Under Donald Trump Compared to Barack Obama’s First 4 Years after being Elected, The Results Might Surprise You.
The morning after Donald Trump was elected President, liberal economist Paul Krugman penned an emotional op-ed in The New York Times claiming that the U.S. stock market would “never” recover from Trump’s surprise victory. Krugman was wrong, of course. Four years later, stock market results were largely strong under Trump, despite the COVID-19 pandemic and accompanying market crash in February and March of 2020. When you look at the stock market by president, you might be surprised. In another few years, we can add President Biden to the list for comparison.
Krugman’s doom-and-gloom assertion was ill-advised, but somewhat understandable considering how badly stock market futures cratered the night of the election; at one point, Dow futures were down more than 800 points! But investors came to terms with a Trump White House much quicker than Krugman had forecast: stocks were actually up the first day of trading after the election. Despite 2020’s unprecedented global uncertainty surrounding the coronavirus, and even with things like impeachment and the ups and downs of the trade war with China, the net stock market results were positive while Trump was in office.
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A conservative-leaning friend of mine brought up Krugman’s wayward post-election assertion recently, scolding the economist for his obviously partisan bias in making such a bold claim in a publication as revered (at least by most) as The New York Times. So, in the name of balance - and keeping my own political leanings under full lock and key - I thought it might be interesting to compare Trump’s stock market results in his four years (minus just a few trading days) to the same period after Barack Obama won his first election in November 2008. Again - this is after their respective election dates, not their inauguration dates the following January.
Here’s what I found in each of the three major U.S. stock market indexes:
Stock Market By President Results (first four years after election)
S&P 500
- Obama: +48%
- Trump: +56%
Dow Jones Industrial Average
- Obama: +43%
- Trump: +52%
Nasdaq
- Obama: +76%
- Trump: +119%
Those are some strong results under both presidents. But stocks were stronger after Trump was elected - particularly growth stocks, as reflected in the more than doubling of the Nasdaq.
As with everything in the stock market, however, context matters. President Obama was elected in the midst of the worst economic downturn America has seen since the Great Depression, and the market didn’t bottom until another four months after he was elected (less than two months after he was sworn in). Trump was elected amid almost universal U.S. growth: rising GDP, escalating home prices, and an unemployment rate (4.8%) that was less than half its late-2009 nadir (10%). So it’s far from an apples-to-apples comparison.
On the flip side, Obama didn’t have the worst global pandemic in a century to deal with.
Now, if you look at the stock market by president, and broke this down by each president’s first terms, the results change quite a bit; Obama actually beat Trump in all three indexes.
Regardless, the strong stock market performance since Trump’s election proves that the daily noise projecting Trump’s poisonous effect on stocks was not only overstated; it was simply incorrect.
Investors Ignoring Trump Drama
Wall Street tuned out most of the drama surrounding Trump. The impeachment inquiry and the trade war with China seemingly held stocks in check at times, but those events didn’t sent markets spiraling downward the way COVID-19 did, and the tariffs initially put a much bigger dent in Chinese stocks (and other emerging markets) than U.S. stocks.
In the aggregate, very little of Trump’s bluster scared investors away. Whether his handling of the pandemic made things worse for the country, economy and stock market is up for debate. And whether Biden’s actions in the first 100 days of his presidency will improve the economy is yet to be declared. But the bottom line is this: Wall Street doesn’t care about who’s president as much as we think it does.
So don’t judge the stock market by president; and don’t invest based on who you think will win elections. Buy stocks that you like, especially when times are good. And for the most part, Donald Trump’s presidency was good for investors.
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*This post was originally published in 2017 and is periodically updated.
